Financial statements include the balance sheet, income statement, and statement of cash flows. The balance sheet summarizes a company's financial position at a point in time by listing assets, liabilities, and equity. It uses the accounting equation that assets equal liabilities plus equity. The income statement summarizes revenues and expenses over a period of time to determine profit or loss. The statement of cash flows explains the changes in a company's cash balance due to operating, investing, and financing activities during a period.

1. FINANCIAL STATEMENTS
PRESENTATION
On
FINANCIAL STATEMENTS
By
ASIM KULKARNI

2. Financial Statement [Introduction]
• There are three types of financial statements which are frequently used.
• It is used to address the needs of external stakeholders i.e. suppliers, investors,
and other people who are interested in the performance of the company but don’t
work for the company.
• Balance sheet – summarizes firm’s financial position at a specific point in time.
• Income statement – summarizes financial performance over a given period of time.
• Statement of Cash Flows – explains how cash is acquired or spent.

3. Balance Sheet
• Balance sheet gives a financial position of a company at a specific point in
time rather than a period of time.
• It is like a photo of the company at that point of time.
• Meaning that the balance sheet of today isn’t as same as it would hav been
one or two months ago.
• It changes on daily basis.
• A Balance Sheet is created around an “Accounting Equation”.
• ASSETS = LIABILITIES + EQUITY

6. Assets, Liabilities, Equity
• Assets tells you how much in-hand cash, inventory, real estate and
PPE the company has.
• Assets are also things that company owns that have certain value.
• Liability means legal responsibility. Here Liabilities mean how much
debt does the company owe to the other company or bank or credit
union.
• Example would be loan from a bank or credit union or bonds which
banks issue in the name of company.
• Anything leftover is called Equity or Owner’s Equity.
• The people who bought the stocks of a company have a residual claim
on Assets.
• Equity is also called the net worth of the company.

7. Assets, Liabilities, Equity (cont’d)
• The terms which fall under Assets are cash, amount receivable,
inventory, PPE(plant property & equipment).
• The terms which fall under Liabilities are accounts payable, wages
payable, bank loan.
• The terms which fall under Equity are common stock, retained stock.

8. Income Statement and Cash Flow Statement
• It is profit and loss statement.
• It does exactly as it’s name suggests i.e. it gives you summary of the
revenue and the expenses generated by a company over a reporting
period.
• The cash flow statement also has an intuitive name and tells us how
much actual cash and cash equivalent entered and left the company
over the reporting period.
• As an investor you have valid reason to be sceptical when the company
claims to have higher profits but there hasn’t been any increase in cash
flow.

9. Conclusion/Summary
• A Balance Sheet is in instant picture of a business.
• A Balance Sheet is comprised of two main sections (Assets – Liabilities
& Equity).
• It allows us to see how riskier a business is!