Understanding Financial Statements

Session Outline

• How’s the business doing?
• Did we make money this year?
• What does my P&L tell me?
• Why do I need a balance sheet?
• Where is my cash coming from?
• Where is my cash going to?
• Why isn’t my cash equal to my profit?

Learning Materials

• Profit and Loss Statement — gives operating results for a specific period
• Balance Sheet
  • shows the assets, liabilities, and capital of a business or other organization at a particular point in time
  • details the balance of income and expenditure over the preceding period
• Cash Flow Statement
  • shows how changes in balance sheet accounts and income affect cash and cash equivalents
  • breaks analysis down to operating, investing and financing activities