Financial Statement - Cycle Diagram
You must know and understand the four main types of financial statements if you're a small business owner.
Let's lay them out:
1. Balance sheets
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The balance sheet is a statement that shows all the liabilities, assets, and capital of a given business or organization at a specific point in time. Think of this as a snapshot of your companies net worth.
2. Income Statement
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The income statements show a business/company's expenses, gains, losses, and income. These factors are then put into an equation to calculate the net profit/loss for a given period.
3. Statement of shareholders
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This is a statement that allows shareholders to see how their investment is moving. The shareholder statement can also be helpful for a company to determine the decisions about future issuances of stock shares.
4. Cash flow statements
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Last but not least, we have the cash flow statement, which provides data about all the inflows of cash in a company. Those include ongoing internal operations, as well as external investment sources.
These are the 4 fundamental statements in a business that you should learn and understand, whether you have an already existing company or are planning to start a business.
