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Understanding financial statements
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1. Understanding Financial Statements By Geni Whitehouse, CPA Countess of
Communicationwww.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
2. Sponsored by:Connect With Sage
3. Imagine your business is a tree.www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
4. Imagine your business is a tree. A fruit-bearing tree.www.evenanerd.com
Copyright © 2013 Geni Whitehouse @Evenanerd on Twitter
5. Imagine your business is a tree. A fruit-bearing tree. Like an apple
tree.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
6. This is your business.www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
7. The income statement measures the fruits of your business
efforts.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
8. Like a tree, your business produces anannual yield...www.evenanerd.com
Copyright © 2013 Geni Whitehouse @Evenanerd on Twitter
9. ...that gets reset every year.www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
10. The Income Statement starts at zero at the beginning of every year and
measures the annual yield.www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
11. Profit = Revenue – Expenses Above the linewww.evenanerd.com Copyright
© 2013 Geni Whitehouse @Evenanerd on Twitter
http://www.slideshare.net/evenanerd/understanding-financial-statements
11/22/2013

5. Understanding financial statements
Page 5 of 8
12. Profit = Revenue – Expenses Above the line Department Focus Bottom
Linewww.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
13. At the end of each year, www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
14. At the end of each year,net earnings (or Net Income) isadded to
www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
15. At the end of each year,net earnings (or Net Income) isadded toRetained
Earnings on theBalance Sheet. www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
16. At the end of each year,net earnings (or Net Income) isadded toRetained
Earnings on theBalance Sheet. www.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
17. The Balance Sheet is a picture in time.www.evenanerd.com Copyright ©
2013 Geni Whitehouse @Evenanerd on Twitter
18. The Balance Sheet is a picture in time.It measures the cumulative result of
yourbusiness efforts.www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
19. The Balance Sheet is a picture in time.It measures the cumulative result of
yourbusiness efforts.It sustains your businessover the long
haul.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
20. A tree can not bear fruit without the support of a strong
trunk.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
21. A tree can not bear fruit without the support of a strong trunk. A business
can not produce annual Net Income without a solid Balance
Sheet.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
22. The Balance Sheet measures what you own and what you
owe.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
23. 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.www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
24. The equity section is the difference between the two. Assets – Liabilities =
Equitywww.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
25. 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.www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
http://www.slideshare.net/evenanerd/understanding-financial-statements
11/22/2013

6. Understanding financial statements
Page 6 of 8
26. If you slice open the trunk of a tree, you can read the story of each year in
its life.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
27. You will find lean years... ...with little or no Net
Income.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
28. And strong years... ...with plentiful Net Income.www.evenanerd.com
Copyright © 2013 Geni Whitehouse @Evenanerd on Twitter
29. Those rings are like the equity section of the Balance
Sheet.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
30. Those rings are like the equity section of the Balance Sheet. Accumulated
Retained Earnings = Equitywww.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
31. Equity = Assets – Liabilitieswww.evenanerd.com Copyright © 2013 Geni
Whitehouse @Evenanerd on Twitter
32. Equity = Assets – Liabilities What you Ownwww.evenanerd.com Copyright
© 2013 Geni Whitehouse @Evenanerd on Twitter
33. Equity = Assets – Liabilities What you Own What you
Owewww.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd on
Twitter
34. Equity = Assets – Liabilities What you Own What you Owe Accumulated
Earningswww.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
35. Without water, no tree can survive for long. No business can survive
without cash.www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
36. The Cash Flow Statement shows where the water went in your
business.www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
37. Income How much Statement cash was consumed by the Income
Statement?www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
38. Income How much Statement cash was consumed by the Income
Statement? How much cash Balance was consumed Sheet in growing the
Balance Sheet?www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
39. The Cash Flow Statement connects the Income Statement to the Balance
Sheet.www.evenanerd.com Copyright © 2013 Geni Whitehouse @Evenanerd
on Twitter
40. The Cash Flow Statement connects the Income Statement to the Balance
Sheet. “If I produced Net Income this year, where did the money go?” The
answer is on the Statement of Cash Flows.www.evenanerd.com Copyright ©
2013 Geni Whitehouse @Evenanerd on Twitter
http://www.slideshare.net/evenanerd/understanding-financial-statements
11/22/2013

7. Understanding financial statements
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41. Net Increase (Decrease) (3,700)www.evenanerd.com Copyright © 2013
Geni Whitehouse @Evenanerd on Twitter
42. Operating cash flow ... ...keeps the business running Net Increase
(Decrease) (3,700)www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
43. Operating cash flow ... ...keeps the business running Net Increase
(Decrease) (3,700)www.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
44. Income Statementwww.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
45. Income Statement Balance Sheetwww.evenanerd.com Copyright © 2013
Geni Whitehouse @Evenanerd on Twitter
46. Income Statement Success in business requires a Balance focus on all Sheet
three financial statements. Statement of Cash Flowswww.evenanerd.com
Copyright © 2013 Geni Whitehouse @Evenanerd on Twitter
47. Sponsored by:Connect With Sage
48. The End Concepts by Geni Whitehouse Even a Nerd Can Be Heard Artwork
(if you can call it that) also by Geni Whitehouse.
www.evenanerd.comwww.evenanerd.com Copyright © 2013 Geni Whitehouse
@Evenanerd on Twitter
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http://www.slideshare.net/evenanerd/understanding-financial-statements
11/22/2013

8. Understanding financial statements
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http://www.slideshare.net/evenanerd/understanding-financial-statements
11/22/2013