Tag Archives: income statement
A proper income statement format comes in two varieties. The first one discussed here is the single step income statement and the second is the multiple step income statement format. There are key differences between the two and you should know when to use each for the right situation. The downloadable spreadsheet is at the end of the tutorial.
Cash flow analysis is so crucial because cash is king! When evaluating a company’s performance, most stakeholders whether internal or external, are interested in how well the company is generating cash. Having a strong grasp of cash flow analysis can give you great insights into the company’s past, present and future performance. There are a few types of cash flow analysis and in a series of tutorials we will explore the cash flow statement, cash flow ratios, discounted cash flow and free cash flow.
Understanding the relationship between financial statements enable you to manage business operations better. The end products of an accounting information system are the four basic financial statements that can be produced. They are :
(1) The Income Statement (2) Statement of Owner’s (Shareholder’s) Equity (3) The Balance Sheet (4) The Statement of Cash Flows
While each statement tells its own story, all four of them are connected to each other directly or indirectly. Understanding the relationship between financial statements will allow you to validate the integrity of the information provided as well as allowing you to build a better foundation for more complicated financial analysis.