financial statement

(noun)

A formal record of all relevant financial information of a business, person, or other entity, presented in a structured and standardized manner to allow easy understanding.

Related Terms

Examples of financial statement in the following topics:

  • Financial Statement Notes

    • The goal of the financial statements is to convey the financial information about a company in an easy to understand format.
    • So, additional supporting financial data is added in the Financial Statement Notes section. .
    • Notes to financial statements are added to the end of financial statements.
    • These notes help explain specific items in the financial statements.
    • Notes on the financial statements convey specific information about the line-items on the statement.

  • Uses of the Financial Statement

    • For large corporations, these statements are often complex and may include an extensive set of notes to the financial statements and explanation of financial policies andmanagement discussion and analysis.
    • Notes to financial statements are considered an integral part of the financial statements.
    • Prospective investors use financial statements to perform financial analysis, which is a key component in making investment decisions.
    • A lending institution will examine the financial health of a person or organization and use the financial statement to decide whether or not to lend funds.
    • One of the uses of financial statements is as a budgeting tool, as in this example.

  • Outputs of Accounting

    • Accounting outputs are financial statements that detail the financial activities of a business, person, or other entity.
    • A financial statement, or financial report, is a formal record of the financial activities of a business, person, or other entity.
    • For a business enterprise, relevant financial information presented in a structured manner is called a financial statement.
    • Notes to financial statements are considered an integral part of the financial statements.
    • The objective of financial statements is to provide information about financial position, performance, and changes.

  • Limitations of Financial Statements

    • Financial statements can be limited by intentional manipulation, differences in accounting methods, and a sole focus on economic measures.
    • In the United States, especially in the post-Enron era, there has been substantial concern about the accuracy of financial statements.
    • Another limit to financial statements as a window into the creditworthiness or investment attractiveness of an entity is that financial statements focus solely on financial measures of health.
    • Even traditional investment analysis incorporates information outside of the financial statements to make organizational assessments.
    • Financial statements can include a number of inaccuracies and limitations that affect the way a company can be viewed.

  • Evaluating Financial Statements

    • With a few exceptions, the majority of the data used in ratio analysis comes from evaluation of the financial statements.
    • Ratio analysis is a tool for evaluating financial statements but also relies on the numbers in the reported financial statements being put into order to be used as ratios for comparison over time or across companies.
    • Financial statements are used as a way to discover the financial position and financial results of a business.
    • Ratios put this financial statement information in context.
    • The evaluation of a company's financial statement analysis is a form of fundamental analysis that is bottoms up.

  • Financial Statements Across Periods

    • Companies prepare three financial statements according to GAAP rules: the income statement, the balance sheet, and the cash flow statement.
    • Financial statements are records that outline the financial activities of a business, individual, or any other entity .
    • Companies generally submit three forms of financial statements.
    • These three financial statements are:
    • The period represented in a given financial statement can vary.

  • Defining the Financial Statement

    • Financial statements report on a company's income, cash flow and equity.
    • A financial statement is a formal report of the financial activities of a business, person, or other entity.
    • Financial statements are a key component of accounting; the process of communicating information about a financial entity .
    • An entity's financial statement typically includes four basic components: a balance sheet, income statement, cash flow statement, and statement of changes in equity:
    • For complex entities, financial statements often include an extensive set of notes as an explanation of financial policies.

  • Interpreting Ratios and Other Sources of Company Information

    • Financial statement analysis, also known as financial analysis, is the process of understanding the risk and profitability of a company through the analysis of that company's reported financial information.
    • In financial statement analysis, comparisons and relationships can be shown in the following ways:
    • The vertical method is used on a single financial statement, such as an income statement.
    • It is possible to calculate a number of ratios from the same set of financial statements.
    • A ratio can show a relationship between two items on the same financial statement or between two items on different financial statements (e.g.balance sheet and income statement).

  • Relationships Between Statements

    • The four main financial statements provide relevant financial information for internal and external users.
    • At the end of each accounting cycle, a company prepares financial statements.
    • The four most common financial statements are the balance sheet, income statement, statement of cash flows and the statement of stockholder's equity.
    • The balance sheet reflects a company's solvency and financial position and the statement of cash flows shows the cash inflows and outflows for a company over a period of time.
    • Recognize the difference between the four common financial statements and explain their relationship to one another

  • Defining the Statement of Cash Flows

    • A statement of cash flows is a financial statement showing how changes in balance sheet accounts and income affect cash & cash equivalents.
    • In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
    • Essentially, the cash flow statement is concerned with the flow of cash in and out of the business.
    • The cash flow statement has been adopted as a standard financial statement, because it eliminates allocations, which might be derived from different accounting methods, such as various timeframes for depreciating fixed assets.
    • Indicate the purpose of the statement of cash flows and what items affect the balance reported on the statement