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Understanding financial statements

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An introduction to the three main financial statements using a tree analogy. If you like this, just imagine what I can do in person at your next event. Go to www.evenanerd.com for more information and my list of topics, expertise, and nerdy obsessions.

My next deck is going to include basset hounds. That is a promise.

Published in: Business

Understanding financial statements

  1. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Understanding Financial Statements By Geni Whitehouse, CPA Countess of Communication
  2. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree.
  3. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree. A fruit-bearing tree.
  4. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Imagine your business is a tree. A fruit-bearing tree. Like an apple tree.
  5. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse This is your business.
  6. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The income statement measures the fruits of your business efforts.
  7. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Like a tree, your business produces an annual yield...
  8. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse ...that gets reset every year.
  9. @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.
  10. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Profit = Revenue – Expenses Above the line
  11. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Department Focus Profit = Revenue – Expenses Above the line
  12. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Department Focus Bottom Line Profit = Revenue – Expenses Above the line
  13. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse At the end of each year,
  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. @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. @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. @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.
  18. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet is a picture in time.
  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.
  20. @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.
  21. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse A tree can not bear fruit without the support of a strong trunk.
  22. @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.
  23. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Balance Sheet measures what you own and what you owe.
  24. @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.
  25. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The equity section is the difference between the two. Assets – Liabilities = Equity
  26. @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.
  27. @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.
  28. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse You will find lean years... ...with little or no Net Income.
  29. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse And strong years... ...with plentiful Net Income.
  30. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Those rings are like the equity section of the Balance Sheet.
  31. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Those rings are like the equity section of the Balance Sheet. Accumulated Retained Earnings = Equity
  32. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Equity = Assets – Liabilities
  33. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own Equity = Assets – Liabilities
  34. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own What you Owe Equity = Assets – Liabilities
  35. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse What you Own What you Owe Accumulated Earnings Equity = Assets – Liabilities
  36. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Without water, no tree can survive for long. No business can survive without cash.
  37. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Cash Flow Statement shows where the water went in your business.
  38. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse How much cash was consumed by the Income Statement? Income Statement
  39. @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?
  40. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse The Cash Flow Statement connects the Income Statement to the Balance Sheet.
  41. @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?”
  42. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
  43. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse
  44. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse ...keeps the business running Operating cash flow ...
  45. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse ...keeps the business running Operating cash flow ...
  46. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Net Increase (Decrease) (3,700) ... To cash in the bank. From Net Income ...
  47. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Income Statement
  48. @Evenanerd on Twitterwww.evenanerd.com Copyright © 2013 Geni Whitehouse Income Statement Balance Sheet
  49. @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.
  50. @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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