Financial statements

Financial Statements

What it is

Financial statements are financial reports of a business’ financial activities. They include four statements, namely: income statements, balance sheets, statements of retained earnings, and cash flows.

An organization’s financial statements should comply with Generally Accepted Accounting Principles (GAAP), that could be International Financial Reporting Standards (IFRS), and should be audited to ensure accuracy. Financial statements help organizations analyze and evaluate their performance.

How it affects your business

The future of an organization highly depends on it keeping a record of its financials. Therefore, the analysis of financial statements assesses the past and current performance of the organization, and projects its future performance as well.

The three main financial statements are: the income statement, balance sheet, and cash flow statement.

Balance Sheet  

The balance sheet is an overview of assets, liabilities, and stockholders’ equity. It is generally implemented at the end of the fiscal year. The balance sheet equation is: assets = liabilities + stockholders’ equity.

Income Statement

Income statements provide an overview of revenues, expenses, net income, and earnings per share (for public shareholding entities). Unlike balance sheets, they cover a range of time, which is either a year for annual reports, or a quarter for quarterly reports.

Cash Flow Statement

The cash flow statement combines the balance sheet and the income statement in operating (regular business operations), investing (buying and selling of assets), and financing (debt and equity) activities. The cash flow statement is where analysts find the amount of dividends paid and/or shares repurchased.

Why XB4

We at XB4 implement our attentiveness, insight, and experience to help you prepare and maintain your organization’s financial and reputational value.

We review, analyze, and assess your organization’s financial statements through different techniques, such as horizontal, vertical, and ratio analysis to build a proper understanding on the health of your business.

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