9/20/2019 3. Major Financial Statements and Other Information Sources | IFT World 1/7 Watch Video Notes for Level I CFA Program R21 Financial Statement Analysis 3. Major Financial Statements and Other Information Sources Instructor’s Note: The ±nancial statements mentioned below will be covered in a lot more detail in later readings. At this stage you simply need to understand the basics. The major ±nancial statements are: balance sheet, income statement, cash ²ow statement and statement of changes in owner’s equity. Balance sheet The balance sheet reports the ±rm’s ±nancial position at a speci±c point in time. It has the following elements: Assets – What the company owns. Liabilities – What the company owes. Owner’s equity – What the shareholders of the company own. The relationship between the elements can be shown as: Assets = Liabilities + Owner’s equity Income statement ® () () () () 0 () Search here.. ()
9/20/2019 3. Major Financial Statements and Other Information Sources | IFT World 2/7 The income statement reports the ±nancial performance of the ±rm over a period of time. It has the following elements: Revenues – Income generated by selling goods and services. Expenses – Costs incurred for producing goods and services. Net income – Resulting pro±t or loss. The relationship between the elements can be shown as: Net income = Revenues – Expenses Cash ±ow statement The cash ²ow statement reports the sources and uses of cash for the ±rm over a period of time. It has the following elements: Operating cash ²ows – Cash ²ows from day-to-day activities.
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