Financial statement

José Manuel Rodríguez Pérez

 What is a financial statement ?
• Financial statements are reports through wich users perceive the reality of
companies, in general, of any economic organization.
WHY DO WE USE THEM?
• Financial perfomance
• Profitability
• liquiditiy
 Income Statement
• Summarizes the results of the company´s operations regarding income and
expense accounts for a certain period.
• This result obtained must be reflected later in the accounting capital section.
• The income statement is divided into two parts: operating and non-
operating. The operating portion of the income statement discloses
information about revenues and expenses that are a direct result of regular
business operations.
• By the other way, the non-operating section discloses revenue and expense
information about activities that are not directly tied to a company's regular
operations.
• For example if a business creates sports equipment, it should make money through
the sale and/or production of sports equipment (operating section)
• And if the sports company sells real estate and investment securities, the gain from
the sale is listed in the non-operating items section ( non operating section)
 Statement of changes in stockholders´ equity

• The main objective is to show the changes in the investment of the

shareholders ( stockholders´ equity)
• In this financial statement, the movements made to increase, decrease, or
update the ítems of capital contributed by the shareholders, is of great
importance for create this statement.
 Financial position statement
• Also known, as the balance sheet reports presents the financial position of
an entity at a given date. It is comprised of three main
components: Assets, liabilities and equity.
• The balance sheet adheres to the following equation, where assets on one
side, and liabilities plus shareholders' equity on the other, balance out:
Assets = Liabilities + Shareholders' Equity
 The cash flow statement
• is a financial statement that summarizes the amount of cash and cash
equivalents entering and leaving a company.
• The cash flow statement (CFS) measures how well a company manages its
cash position, meaning how well the company generates cash to pay it's debt
obligations and fund it's operating expenses. The cash flow statement
complements the balance sheet and income statement and is a mandatory
part of a company's financial reports since 1987.
• The main components of the cash flow statement are:
• Cash from operating activities (cash generated from a company´s products )
• Cash from investing activities (changes in equipment, assets, or investments
relate to cash from investing )
• Cash from financing activities (sources of cash from investors or banks )
 Financial Analysis
• Financial analysis is the process of evaluating businesses, projects, budgets
and other finance-related entities to determine their performance and
suitability. Typically, financial analysis is used to analyze whether an entity is
stable, solvent, liquid or profitable enough to warrant a monetary investment.
When looking at a specific company, a financial analyst conducts analysis by
focusing on the income statement, balance sheet, and cash flow statement.