Basic financial statements give important information about how healthy a business is. They usually include three main parts: the income statement, balance sheet, and cash flow statement.
Income Statement: This part shows how much money a company made and spent over a certain time. For example, if a company makes 30,000, it has a profit of $20,000. This profit is a good sign that the company is doing well.
Balance Sheet: This is like a snapshot of what a business owns, what it owes, and the owner’s share at a specific moment. If a business has 60,000 in liabilities (debts it needs to pay), the owner’s equity would be $40,000. A strong balance sheet usually means the business is financially stable.
Cash Flow Statement: This shows the movement of cash in and out of the business. Positive cash flow happens when more cash comes in than goes out. This is a good sign because it means the business can pay its bills and has money to invest in growth.
By looking at these statements, people interested in the business can understand if it is making money, can pay its debts, and is running well. This information helps them make smarter decisions.
Basic financial statements give important information about how healthy a business is. They usually include three main parts: the income statement, balance sheet, and cash flow statement.
Income Statement: This part shows how much money a company made and spent over a certain time. For example, if a company makes 30,000, it has a profit of $20,000. This profit is a good sign that the company is doing well.
Balance Sheet: This is like a snapshot of what a business owns, what it owes, and the owner’s share at a specific moment. If a business has 60,000 in liabilities (debts it needs to pay), the owner’s equity would be $40,000. A strong balance sheet usually means the business is financially stable.
Cash Flow Statement: This shows the movement of cash in and out of the business. Positive cash flow happens when more cash comes in than goes out. This is a good sign because it means the business can pay its bills and has money to invest in growth.
By looking at these statements, people interested in the business can understand if it is making money, can pay its debts, and is running well. This information helps them make smarter decisions.