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Reading Consolidated Financial Statements
Most major corporations comprise numerous companies bought along the way to create their empires. The financial statement reflects the financial results for all the entities it bought as well as the original [more…]
Reading an Annual Report
Without a doubt, annual reports are at the pinnacle of corporate communication. The point of the annual report is to provide a summary of exactly how a company has performed in the preceding year, and [more…]
The Importance of a Financial Paper Trail
Accounting for a company's finances is all about creating an accurate paper trail. You want to track of all your company's financial transactions so if a question comes up at a later date, you can turn [more…]
Presenting Financial Reports: Turning Numbers into Information
Often, when the financial types get up and present a business's financial status, it seems like the lights got turned out and everyone went home. Even though you listen intently, it seems like they're [more…]
The Importance of Standardizing Business Source Documents
All business transactions require paperwork, called source documents. Business source documents, which are important to bookkeeping, need to be standardized. With standardized source documents, your bookkeeper [more…]
How to Read an Income Statement
Some aspects of income statements may seem obvious, but other parts of income statements might leave you stumped. You need to identify the parts of an income statement and to know what they mean before [more…]
Reasons to Report Extraordinary Gains and Losses on Your Income Statement
Many businesses report unusual, extraordinary gains and losses on their income statements. If your business has extraordinary gains and losses to report, your business's income statement is divided into [more…]
What You Put in a Business Balance Sheet
A balance sheet is the financial condition of your business at an instant in time. In your business balance sheet, you must put financial information that's in constant motion because the activities of [more…]
How to Read a Business Balance Sheet
When you read through your business's balance sheet, like the balance sheet shown in this figure, you may notice that it doesn’t have a "punch line" like the income statement does. You can’t look at just [more…]
The Differences between Internal and External Business Balance Sheets
Balance sheets, statements of a business's financial condition, are prepared for internal and external use. External balance sheets and internal balance sheets are intended for different audiences and [more…]
How to Judge Solvency on a Balance Sheet
Solvency refers to the ability of a business to pay its liabilities on time. Your business needs to remain solvent because delays in paying liabilities on time can cause you very serious problems. In extreme [more…]
How to Read an Auditor's Report
Your business's financial statement audit report can give your business a clean bill of health, or the auditor's report may state that your financial statements are misleading and should not be relied [more…]
The Purpose of Financial Reporting
Financial reports are the documents and records you put together to track and review how much money your business is making (or not). The purpose of financial reporting is to deliver this information to [more…]
Including Adequate Disclosures in Your Financial Report
A financial report needs to include disclosures of important financial information about the business, as well as financial statements. The term disclosures [more…]
Six Things in an Annual Report Necessary for Fundamental Analysis
After a huge annual report arrives in the mail, you may not know where to begin. So here are six things you should always consider when you get an annual report to make sure you are picking up the key [more…]
Connections between Profit & Loss Statement and Balance Sheet Accounts
We make remembering accounting rules and connections easy. The following list shows the connections between the Profit & Loss Statement and the balance sheet accounts. [more…]
Primary Financial Statements of a Business
This list gives details of the three primary financial statements in the running of a business. These statements record your business’s performance, letting you analyse and identify where you’re strong [more…]
Important Financial Documents for Your Small Business
Managing the finances of your small business can be a challenge. To survive and thrive, you must earn profit consistently, generate cash flow from profit, and control your financial condition. You need [more…]
Formulas and Functions for Financial Statements
As the business manager, you’re in control of your business’s accounting needs, so you need a strong understanding of the ins and outs of financial statements, including what goes on them and in what order [more…]
What's Included in a Financial Statement?
With a bit of practice, understanding financial statements is easy. Think of your Balance Sheet reports as a set of before-and-after photos, with your Profit & Loss report telling the story of what happened [more…]
Overview of Annual Report Elements
Annual reports can be daunting, and you may be relieved to know you don’t actually need to scour every page of one. The following list gives you the big picture on annual reports, from a UK perspective [more…]
How to Make Sense of a Company's Profitability Ratios
When getting to grips with interpreting a company report, you can test a company’s stock market reputation and money-making prowess using the following important formulas. [more…]
How Liquidity Ratios Figure into Company Reports
If a company doesn’t have cash on hand to cover its day-to-day operations, it’s probably on shaky ground. Use the following formulas to find out whether a company has plenty of liquid [more…]
Accounting Details in Different Kinds of Financial Statements
The three key financial statements are the income statement, balance sheet, and statement of cash flows. All three record the same daily accounting transactions occurring in a business, but each presents [more…]
What Is an Income Statement for a Business?
Did your business make any money? You can find the answer in your income statement, the financial report that summarizes all the sales activities, costs of producing or buying the products or services [more…]
