Financial Statements And List of Types

Financial statements are documents that document the activities of a business as well as the financial performance of an organization.

They are usually scrutinize by accountants, government agencies companies as well as other companies.

to verify accuracy, and also to serve as a source of financing, tax or investment reasons.

The primary financial statements for profit include the balance sheet income statement as well as the declaration of the flow of money and a statement of the changes in equity.

Non-profit organizations use the same but distinct collection of financial reports.

Understanding Financial Statements

Financial analysts and investors rely on financial data to assess the company’s performance and make forecasts about the direction that the stock price of the company.

One of the primary sources of trustworthy and authentic financial information are the annual report that contains the financial statements of the company Family Office Singapore.

Financial statements Financial statements are utilize by market analysts, investors and lenders to evaluate the company’s financial health as well as its earnings potential.

The three main financial statements include those of the income statement, balance sheet and the statement of cash flow.

Balance Sheet

Balance sheets are a summary of the the balance sheet is the summary of the company’s assets, its liabilities, and equity of shareholders, as a time-lapse.

The date on bottom of the sheet informs that you took the picture which usually is the last day that of the report period.

Here is the breakdown of things that make up a balance sheet.

Assets

• Receivables from accounts is the total amount the money own to the business by its customers in exchange for the purchase of its product or service.
• Inventory is the inventory of goods that an organization has on hand that plans to sell in part of its business.
•  It could include items that are finish as well as work in progress which aren’t finish yet or the raw materials in stock which are yet to be use.
• Prepaid expenses are those that were paid prior to when they become due. They are classify as assets because their value is not yet acknowledge.
• Should the benefit not be realize then the business would probably be entitle to the possibility of a reimbursement.
• Plant, property and equipment are capital assets that belong to the company to ensure their long-term value.
• These include buildings that are that are use to manufacture heavy machinery that is use to process raw materials.
• Investments are the assets that are held for future growth that is speculative.
• They aren’t employ in any the course of business; they’re kept for capital appreciation.
• Patents, trademarks, goodwill and other intangible assets cannot be physically touch, but they have a the potential to bring future economic (and usually long-term advantages) for the company.

Liabilities

• The accounts payable are those bills to be paid in the normal operations of a company.
• This includes rental invoices, utility bills and the obligation to purchase raw material.
• The wages payable are due to employees for work hours.
• Notes payable are as debt instruments, which are official debt agreements that include the payment schedule and the amount.
• Dividends to be paid are dividends that were declare to be paid to shareholders but haven’t yet been paid.
• Long-term debt could refer to many obligations like mortgages.
• Sinking bond funds and other loans due in totality for more than one calendar year.
•  It is important to note that the short-term component of the debt is list as a liability for the current year.

Shareholders’ Equity

• Shareholders’ equity refers to the sum of the company’s total assets less the total liability.
• Shareholders equity (also call stockholders equity) is how much money which would be paid back to shareholders in the event all
• These assets are liquidate and all the debt of the company was paid off.
• retain earnings are a component of the equity of shareholders and represent the amount of net earnings not distribute to shareholders as dividends.

Example of a Balance Sheet

Below is a small portion of the ExxonMobil Corporation’s (XOM) balance sheet for the fiscal year 2021 which was report at the end of December. 31, 2021.

• The total assets total $338.9 billion.
• All liabilitywere $163.2 million.
• The total Equity stood at $175.7 billion.
• Total equity and liabilitieswere $338.9 billion that is the same as more than the amount of assets during the time. 1

Income Statement

Contrary to the balance sheet the income statement is an extend period of time, which includes an entire year for financial statements, and an quarter for financial statements for quarterly.

The income statement offers an overview of the revenue and costs, net earnings as well as earnings per share How to Resolve QuickBooks Error code 15102?.

Revenue

Operating income is money that a company earns from selling its goods or products. The operating income for a manufacturer of automobiles will be earn by the sale and production of automobiles.

Operating revenue is derive through the main business activities of a firm.

Non-operating revenues are the earnings made from non-core business operations. These are revenues that do not serve as the main purpose for the organization.

Some non-operating revenue examples include:

• The interest earn on cash is paid to the bank
• The rental income generate from a property
• Profits from strategic partnerships, such as royalty payment receipts
• Revenue from an advertising display on the property of the company

Other income is the income generat by different activities. Other income may include the gains from the disposal of long-term assets like vehicles, land or even the subsidiary.

Expenses

The primary expenses are incurre in your process to earn income from the main operation of the business.

These expenses include costs of selling goods (COGS) as well as selling general and administrative expenses (SG&A) and depreciation. amortization, as well as R&D (R&D).

Common expenses include wages for employees commissions on sales, services like transportation and electricity.

The expenses that are  to secondary activities, for instance, interest paid on debt or loans.

The losses incurre from selling an asset can also be report as expenses.

The principal purpose behind the report of income is provide information about profitability and results of business activities

However, it can be extremely useful in determining the extent to which revenue or sales are rising when compare across many time frames.

Investors can also assess how well the management of a business is able to control expenses

assess whether the company’s efforts in reducing the costs of sales could boost profits in the future.

Example of an Income Statement

Below is a section of the ExxonMobil Corporation’s earnings statement for fiscal year 2021 that was report as of December. 31st, 2021.

• The total Revenuewas $276.7 billion.
• Total cost totall $254.4 billion.
• Gross incomeor profits were $33B. 2

Cash Flow Statement

Cash flow statements (CFS) evaluates the extent to which an organization generates enough cash in order to pay their debts

finance their operating expenditures, and to fund investments. It is a supplement to both the balance sheet

as well as the income statements.

The CFS lets investors know the way in which a business’s operations are going as well as

the company’s cash is coming from and the way in which it’s being spent.

The CFS can also provide an insight into whether a business is on good financial ground.

There isn’t any formula in itself, to calculate the balance sheet.

It is comprise of three sections that detail cash flow from the different operations for which a company makes use of its cash.

The three elements that comprise the CFS are shown below.

Operating Activities

The operational activities that are includ in the CFS comprise all sources and applications of cash that are generate by running the business or selling its goods or services.

Cash from operations is comprise of any adjustments made to the cash accounts receivable and inventory, as well as depreciation as well as account payable.

These transactions also comprise wages and income tax payments as well as interest and rent payments as well as cash receipts made through the sales of a service or service.

Investing Activities

Investment activities encompass all cash-relate sources or uses that a business earns from its investments for the long-term growth of the business.

The purchase or sale of assets, loans given to vendors or obtain from customers, or payment relate to a merger or acquisition are includ in this class.

In addition, purchases of fixe assets, such as property plants, equipment, and property (PPE) are cover under this subsection.

Shortly, any changes to equipment or investments, also known as assets, refer to the cash generate from investing.

Financing Activities

Cash generate from funding activities comprises the sources of money from banks 

investors and the applications of cash that is paid to shareholders.

The financing activities include debt issuance equity issue, stock repurchases, dividends, loans, and the repayment of debt.

The statement of cash flows is a reconciliation of the income statement to the balance sheet, in three important business functions.

Example of a Cash Flow Statement

Below is a section of the ExxonMobil Corporation’s Cash Flow statement for the fiscal year 2021 which was release on December. 31st 2021.

It is possible to see the three sections of the cash flow statement as well as their respective results.

• Operational activities generate positive flow of cash at $48 billion.
• Investment activities produce negative cashflow or cash-outflows that total -$10.2 billion over the course of the year.
•  In addition to plant, property and equipment compris the majority of cash flow outflows and this means that the business made.
• Investments in the purchase of new assets for fix purposes.
• The financing activities result in negative cash flow which translates to cash flows of -$35.4 billion over the course of the year.
• Reduce short-term debt as well as dividends paid out account for the bulk of money outflows. 3Statement of changes in Shareholder Equity

The statement of equity changes tracks the equity total over time. The information is  to the balance sheet for the similar period.

The final balance of the equity statement is the same as the equity total report in the balance sheet.

The method for adjusting equity of shareholders will differ between companies but, generally speaking there are two elements:

• The beginning equity is the equity that has been create at the end of the previous period, which simply rolls over to the beginning of the next period.
• (+) Net income: This is the amount the business earn during the course of a particular period.
•  The profits from operations are declare as equity in the business and the earnings are add to retain earnings at the end of the year.
• (“) Dividends: This is the amount that is distribute to shareholders through profits.
•  Instead of keeping the entire amount of the profits of a business the business may decide to distribute a portion of its profits to investors.
• (+/-) Additional complete income: it is the change from one period to another in the other income.
• Base on transactions that occur, this figure can be a subtraction or addition from equity.

In the statement of equity changes the company also reports the activity

Acquisitions, dispositions and amortization of stock-base awards and other financial activities.

This data is helpful to study to find out the amount of money being kept by the company to fund future growth instead of being distribute to external sources.

Consolidate Statement of Changes in Equity, ExxonMobil (2021).

Statement of Comprehensive Income

A less frequently use financial statement the Statement of Comprehensive Income provides a summary of the net income of the standard

while taking into account adjustments of other income (OCI).

Other comprehensive income comprises all realize profits and losses not includ in the statement of income.

The financial statement displays the total change in income of a company as well as losses and gains that are not yet report in accordance with accounting guidelines.

Examples of transactions report on the income statement are:

• Net earnings (from the income statement).
• Losses or gains that aren’t realize in credit securities
• Gains or losses that are not realize from derivative instruments
• Translation adjustments that are not realize cause by foreign currency
• Losses or gains that are not realize as a result of retirement plans

In the following example, ExxonMobil has over $2 billion of unrecognize net income.

Instead of reporting $23.5 billion net profit, ExxonMobil reports nearly $26 billion of its total earnings when comparing other incomes.

Consolidate Statement of Comprehensive Income, Exxon Mobil 2021.

Nonprofit Financial Statements

Non-profit organizations keep track of financial transactions on the same financial statements.

However, due to distinctions between a for-profit organization and a pure philanthropic one

There are some distinctions in the financial statements that are use.

The most common financial statements that are use by an organization that is not for profit comprise:

• Statement of Financial Position it is the same as of a business’s balance sheet. The most significant difference is that non-profit organizations do not have equity positions.
• However, any left-over surplus balances after the liquidation of all assets and liabilities have been paid is known as net assets..
• Statement of Activity: this is the equivalent to a for-profit company’s statement of earnings. The report records the changes of operations over time.
• It also includes the report of grants, donations events, revenue from events, and the expenses require to make it occur.
• Statement of Functional Costs This is only applicable to non-profit organizations. The statement of expenses for functional purposes
• lists expenses according to the function of the entity (often separate into program, administrative, or even fundraising expenditures).
• This information is release to the general public to show how much of the expenses of the entire company directly relate with the purpose.
• Statement of Cash Flow This is the same as to a nonprofit’s statements of cash flows. Although the names of the accounts could differ due to the distinct nature of a non-profit
• Organization but the document is divid into investment, operating and financing actions.

Limitations of Financial Statements

Although financial statements offer many details about the company, they have some limitations.

They are subject to interpretation and , as a result investors can draw wildly different conclusions regarding the financial performance of a company.

For instance, certain investors may want stock purchase and others might prefer that their money be is invest in long-term assets.

The amount of debt a company has could be acceptable for one investor , while another may be concern about the amount of debt that the company is carrying.

When looking at financial statements, it’s crucial to examine different periods to see whether any trends are evident and to examine the results of the company

against other companies within the same industry.

Financial statements are only as reliable as the data that is into them.

In many instances, it has been proven that fraud in financial transactions or poor oversight has  to inaccurate financial statements that are design to deceive consumers.

Even when looking at the financial statements that have been audit there’s a degree of trust that the user should place in the credibility of the report as well as the numbers presen.

What Are the Main Types of Financial Statements?

The three most common types of financial statements include the balance sheet income statement along with the cash flow report.

These three statements are a compilation of the liabilities and assets of a company, their revenue and expenses and cash flow from investing, operating and financing.

What Are the Main Items Shown in Financial Statements?

Base on the company, the line items on the financial statement may differ but the most commonly

use line items include revenues and costs of selling goods tax

as well as marketable securities, cash inventory, short-term debt and long-term loans, accounts payable, accounts receivable and cash flows generate by operating, investing and financing.

What Are the Benefits of Financial Statements?

Financial statements are a way to understand the way a company operates.

They reveal how much and what businesses earn their revenue and what the price of running a businesses is..

also how effectively the company manages cash and what its liabilities and assets are.

Financial statements offer all the information about how the company manages its own affairs.

How Do You Read Financial Statements?

Financial statements can be interprete in various ways.

First the financial statements can be compare with prior times to gain a better understanding of changes in the course of time.

For instance, comparative income statements provide information about the company’s earnings last year , and also the amount of income a company is this year.

Indicating the change year-over year informs people who read the financial statements that show the health of a business.

Financial statements are also analyze by comparing their results with others in the industry or to competitors.

When comparing financial statements with other businesses, analysts can discern which businesses are doing well and which ones are trailing in comparison to the rest of the field.

What Is GAAP?

GAAP stands for Generally Accepte Accounting Principles. (GAAP) are the standard set of rules by that United States companies must prepare their financial statements.

These are the rules that outline how to record transactions, when it is appropriate to recognize revenue and the time when expenses  to be record.

International corporations may apply the same set of rules known as International Financial Reporting Standards (IFRS).

The Bottom Line

The financial statements provide the key to an external review of the financial performance of a business.

The balance sheet reveals the company’s financial health by revealing its solvency and liquidity and the income statement details the profitability of a business.

A cash flow statement joins the two by analyzing sources and the use of cash. In conjunction,

The financial statements show what a company’s performance over time and compares itself to rivals.