Question

Access your company’s financial statements or any public company statement; explain the difference between each financial statement

Answer 1

The financial statement of any public company when issued majorly consist of four things

· Statement of income and expenditure

· Balance sheet

· Statement of cash flow

· Management discussion and analysis

The income statement is statement for the fiscal period during which all related income and expenditures are matched with each other and net income is calculated or net loss and then that is transferred to the equity on the balance sheet. Income statement is for a period of time. It can be for a year or quarterly or semi-annually. The balance sheet is a snapshot of the financial position of the company at a certain point of time. Normally the balance sheet is prepared quarterly or at the end of year. Balance sheet shows us how much asset and liability the company has at a certain point of time. The statement of cash flows shows the movement of cash across the company, inflow as well as outflow. There are three parts of a statement of cash flow, Cash flow from operation, Cash flow from Investing and Cash flow from financing. The statement of cash flow only considers the cash unlike income statement non cash activities are also considered. The MD&A is one of the most important components of the financial analysis because it tells us as to what managements thinks about the growth of the company. What are the opportunities that the company has and what challenges the company can face in the coming time periods? The MD&A gives a broad level opinion of the management about the company.