@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Understanding
Financial Statements
By Geni Whiteho...
Sponsored by:
Connect With Sage
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Imagine your business is a tree.
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Imagine your business is a tree.
A fruit-bearing t...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Imagine your business is a tree.
A fruit-bearing t...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
This is your business.
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The income statement measures the fruits of
your b...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Like a tree, your business produces an
annual yiel...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
...that gets reset every year.
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Income Statement
starts at zero at the beginni...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Profit =
Revenue – Expenses
Above the line
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Department Focus
Bottom Line
Profit =
Revenue – Ex...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
At the end of each year,
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
At the end of each year,
net earnings (or Net Inco...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
At the end of each year,
net earnings (or Net Inco...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
At the end of each year,
net earnings (or Net Inco...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Balance Sheet is a picture in time.
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Balance Sheet is a picture in time.
It measure...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Balance Sheet is a picture in time.
It measure...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
A tree can not bear fruit
without the support of a...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
A business can not produce annual Net Income
witho...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Balance Sheet measures what you own
and what y...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Balance Sheet measures what you own
and what y...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The equity section is the difference between
the t...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The equity section is the difference between
the t...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
If you slice open the trunk of a tree,
you can rea...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
You will find lean years...
...with little or no N...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
And strong years...
...with plentiful Net Income.
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Those rings are like the equity
section of the Bal...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Those rings are like the equity
section of the Bal...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Equity =
Assets – Liabilities
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
What
you
Own
Equity =
Assets – Liabilities
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
What
you
Own
What
you
Owe
Equity =
Assets – Liabil...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
What
you
Own
What
you
Owe
Accumulated Earnings
Equ...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Without water, no tree can survive for long.
No bu...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Cash Flow Statement
shows
where the water went...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
How much cash
was consumed
by the Income
Statement...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
How much cash
was consumed
by the Income
Statement...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Cash Flow Statement
connects
the Income Statem...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
The Cash Flow Statement
connects
the Income Statem...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Net Increase (Decrease) (3,700)
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Net Increase (Decrease) (3,700)
...keeps the busin...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Net Increase (Decrease) (3,700)
...keeps the busin...
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Income
Statement
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Income
Statement
Balance
Sheet
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Income
Statement
Balance
Sheet
Statement of
Cash F...
Sponsored by:
Connect With Sage
@Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
Concepts by Geni Whitehouse
Even a Nerd Can Be Hea...
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Understandingfinancialstatements geni whitehouse

  1. 1. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Understanding Financial Statements By Geni Whitehouse, CPA Countess of Communication
  2. 2. Sponsored by: Connect With Sage
  3. 3. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree.
  4. 4. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree. A fruit-bearing tree.
  5. 5. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree. A fruit-bearing tree. Like an apple tree.
  6. 6. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse This is your business.
  7. 7. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The income statement measures the fruits of your business efforts.
  8. 8. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Like a tree, your business produces an annual yield...
  9. 9. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse ...that gets reset every year.
  10. 10. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Income Statement starts at zero at the beginning of every year and measures the annual yield.
  11. 11. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Profit = Revenue – Expenses Above the line
  12. 12. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Department Focus Bottom Line Profit = Revenue – Expenses Above the line
  13. 13. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse At the end of each year,
  14. 14. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse At the end of each year, net earnings (or Net Income) is added to
  15. 15. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse At the end of each year, net earnings (or Net Income) is added to Retained Earnings on the Balance Sheet.
  16. 16. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse At the end of each year, net earnings (or Net Income) is added to Retained Earnings on the Balance Sheet.
  17. 17. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet is a picture in time.
  18. 18. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet is a picture in time. It measures the cumulative result of your business efforts.
  19. 19. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet is a picture in time. It measures the cumulative result of your business efforts. It sustains your business over the long haul.
  20. 20. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse A tree can not bear fruit without the support of a strong trunk.
  21. 21. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse A business can not produce annual Net Income without a solid Balance Sheet. A tree can not bear fruit without the support of a strong trunk.
  22. 22. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet measures what you own and what you owe.
  23. 23. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet measures what you own and what you owe. What you own is called your Assets. What you owe is called your Liabilities.
  24. 24. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The equity section is the difference between the two. Assets – Liabilities = Equity
  25. 25. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The equity section is the difference between the two. Assets – Liabilities = Equity Equity approximates the net value of your business. Equity is sometimes called Net Worth.
  26. 26. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse If you slice open the trunk of a tree, you can read the story of each year in its life.
  27. 27. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse You will find lean years... ...with little or no Net Income.
  28. 28. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse And strong years... ...with plentiful Net Income.
  29. 29. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Those rings are like the equity section of the Balance Sheet.
  30. 30. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Those rings are like the equity section of the Balance Sheet. Accumulated Retained Earnings = Equity
  31. 31. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Equity = Assets – Liabilities
  32. 32. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own Equity = Assets – Liabilities
  33. 33. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own What you Owe Equity = Assets – Liabilities
  34. 34. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own What you Owe Accumulated Earnings Equity = Assets – Liabilities
  35. 35. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Without water, no tree can survive for long. No business can survive without cash.
  36. 36. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Cash Flow Statement shows where the water went in your business.
  37. 37. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse How much cash was consumed by the Income Statement? Income Statement
  38. 38. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse How much cash was consumed by the Income Statement? Income Statement Balance Sheet How much cash was consumed in growing the Balance Sheet?
  39. 39. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Cash Flow Statement connects the Income Statement to the Balance Sheet.
  40. 40. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Cash Flow Statement connects the Income Statement to the Balance Sheet. The answer is on the Statement of Cash Flows. “If I produced Net Income this year, where did the money go?”
  41. 41. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Net Increase (Decrease) (3,700)
  42. 42. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Net Increase (Decrease) (3,700) ...keeps the business running Operating cash flow ...
  43. 43. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Net Increase (Decrease) (3,700) ...keeps the business running Operating cash flow ...
  44. 44. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Income Statement
  45. 45. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Income Statement Balance Sheet
  46. 46. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Income Statement Balance Sheet Statement of Cash Flows Success in business requires a focus on all three financial statements.
  47. 47. Sponsored by: Connect With Sage
  48. 48. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Concepts by Geni Whitehouse Even a Nerd Can Be Heard Artwork (if you can call it that) also by Geni Whitehouse. www.evenanerd.com The End

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