Understanding financial statements

@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.

@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.

@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.

@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.

@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?

@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?”

@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.

@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