A focused value presentation, Providing information to existing & new potential Investors, Lenders & Creditors to simplify their first step towards making financial decisions & providing resources to the entity they invest in.

1. Balance Sheet (B/S):

It describes the financial position of a firm in terms of Assets & Liabilities. Assets are the products & services that you own, whereas Liabilities are the products & services that you owe to someone. Therefore, it helps in determining the economic resources, financial strength & claims against the company.

For a simple case, it is always suitable for an investor to calculate its Current ratio & Quick Ratio before investing, which further ensures liquidity (ability to transform an asset into cash). We will learn about the ratio analysis & investing decoded in coming newsletters. Stay Tuned! Subscribe now for premium access. An ideal situation is always having (Current Asset > Current Liabilities).

2. Income Statement (I/S):

It describes the financial performance of a company over a period of time via Accrual Accounting.

Accrual accounting? It is an accounting method where revenue & expenses are recorded when the transaction occurs irrespective of the settlement cycle (Payments might not be received in real-time but will be received in the coming days).

Let us consider a simple example: Suppose, ABC Ltd. is a Food business & XYZ is its vendor, which supplies Packaging materials for its goods & charges ₹100 for the same from ABC Ltd. Here, after a month, ABC Ltd is going to make a transaction of ₹100 as an expense to XYZ, but payment hasn’t been debited in real-time, still ABC Ltd. will account ₹100 expense in their I/S. The entire process of accounting & this scenario comes under Accrual Accounting.

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Income Statement: It presents the results of Operations (Revenues & gains less(-) expenses, losses & taxes) for a company over a period of time.

Basic Format to begin with | Finance for Non-finance people | Finance Made Easy

Here, we go

Total Revenues (Net sales + Revenues/sales & Gains)

(-) Total Expenses (COGS + Operating expenses + Losses & other expenses)

(-) Income tax expense = Net Income/Earnings

*COGS (Cost of Goods Sold): Cost incurred by a firm to sell a product/selling expenses.

*Operating Expenses: Expenses which occur on a periodical & regular basis which cannot be ignored but can be managed.
Example: Wages & Salaries of an employee which has to be paid on a regular interval.

3. Cash flow statement (C/F):

It describes financial performance via cash flows. It presents the change in cash & cash equivalents classified under Operating, Investing & Financing activities.

It majorly understands where did the capital come from, how it is being utilized & at what volume? More insights about it! Coming soon! Practical scenarios. Subscribe!

4. Statement of Changes in equity:

It shows the changes in the capital received & retained earnings over a period of time.

It helps in analyzing an investor regarding the source of capital & the rate of profits made over a period of time & its consistency to maintain the same. Value investors usually prefer a consistent approach for a long term vision.

All set! These were the first baby step before entering into Financial Markets & investing. More to come, on the way! Stay tuned! Subscribe to Finocontrol!

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