Discuss the four basic financial statements commonly used in security analysis.

Expert Solution

The four basic financial statement are 1) Balance sheet 2)Income statement 3) Statement of changes in equity 4) Statement of cash flows

Balance sheet reports financial position of business at a point of time.Balance sheet consists of three element- Asset,Liability & Equity. Assets= Liability+Equity

Income statement reports financial performance of the firm over a period of time.The elements of Income statement are revenue,expenses & other income

Statement of changes in equity reports the amounts and source of changes in equity investors investment in the firm over a period of time

statement of cash flows reports the company's cash receipts and payments. These cashflows are classified as-

Operating cashflow- Includes transaction involve the normal business of the firm

Investing Cashflow - Includes acquistion or sale of property

Financing cash flow- Resulting from issuance of firms debt and equity securities

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