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Financial Reports

Financial Report or a Financial Statement is a formal documentation elaborating on the financial status of the firm to its shareholders. As a company is a complex organism, a transparent analysis of its finances is not possible in a single document. A financial statement is thus a set of 4 documents providing an amplification from different viewpoints that complete the picture. These include:

Balance Sheet

Also called the Statement of Financial Position. It discusses what the firm owns and what it owes, in terms of assets, liabilities and owners’ equity. It is generally recorded at the end of the fiscal year and is understood better by the equation:

Assets = Shareholders’ Equity + Liabilities

Here assets are differentiated in terms of liquidity (Current&Fixed) and in terms of tangibility (Tangible&Intangible). While liabilities are discussed in terms of their duration (Current&Noncurrent Liabilities).

Income Statement

Often called,  Statement of Comprehensive Income, Statement of Revenues & Expenses and P&L Statement. This explains the revenues, expenditures and the profits of the firm. For comparison, it generally displays 2-3 years of income data.

Cash Flow Statement

It records bank transactions in terms of Inflow of Cash, Outflow of Cash & Cash Reserves. It provides a record of the financing and investing activities undertook by the firm.

Statement of Changes in Equity

Also known as, Equity Statement or  Statement of Retained Earnings. It reports the changes in the firm’s Share Capital, Retained Earnings & Accumulated Reserves.  Simply put, the Equity Statement discusses the movement of share ownership between shareholders.