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Financial Statement Analysis

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1. What does the income statement tell you about the company?
2. What does the balance sheet tell you about the company?
3. What does the statement of cash flow tell you about the company?
4. What business decisions could be made using each of these financial statements?
5. What information is provided in the statements that will assist you in making these business decisions? What information is not provided that could assist in managerial decision making?

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What does the income statement tell you about the company?

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1. What does the income statement tell you about the company?

Income statements tell us about the results of operations of the last fiscal year of the organization. It provides a good overview of the revenues earned and expenses incurred by the company. Income statement basically tells us how profitable or loss making the business was in the last fiscal year, the major sources of revenues and the major expense items for the company. It helps us in evaluating areas such as operating margins, gross and net profit on sales, etc.

2. What does the balance sheet tell you about the company?

Balance sheet tells us about the position of a company as on a particular date, i.e., at the end of the fiscal year. It tells us about the assets and ...

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Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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