This Is How To Read The Company’s Financial Statements

The income statement serves to show whether the business is in a position of profit or loss. The income statement is divided into two, they are income and expenses, each consisting of operational and non-operational. The components in it are revenue, business profit and loss, loan burden, tax burden, company profit or loss, extraordinary items, and minority rights. What is meant by extraordinary items is profit or loss obtained only at special moments, while minority rights are the interests of share ownership of a subsidiary that is not owned by the parent company. Meanwhile, we also recommend you to hire Xero bookkeeper parramatta if you need the best bookkeeper to assist your business.

Now, in this section, we need to examine, whether the company profits or loss and how much revenue we get. Compare revenue and cost of goods sold (COGS). After that, also compare income and expense data with the previous year’s report.

Furthermore, the cash flow statement shows the inflows and outflows of company funds. This type can help us project future cash flows with the latest reports.

Components in the cash flow statement include operating cash, cash from investments, and cash from funding. Investment cash is the entry and exit of funds relating to corporate investment, then cash from funding is the receipt of capital for the company.

This report is useful if shareholders wonder why the company does not distribute dividends, even though the equity is high. It could be because the cash flow is empty or does not have sufficient cash supply.

Aside from that, the statement of changes in the capital shows data about the amount of capital owned by the company. We can understand the back and forth of a company from how much additional capital.

This report component consists of the company’s initial capital, the amount of net profit, and additional capital.

Finally, through the balance sheet, we can find out the condition, information, and financial position of the company at the specified time. The three elements of this report are assets, liabilities (expenses), and equity (capital), where assets are liabilities plus equity.

This report shows whether the company is doing well through data on the amount of the company’s wealth. A company can be assessed to run smoothly if its cash is sufficient to meet operational needs.