In this week's post we are going to share with you the financial statements that a business has, what do they mean? And what you need to know to understand them.
As its name indicates, the financial statements are reports of our company that are delivered periodically to know the state in which the company is.
What are the main ones?
- Cash flow , this shows us the state of liquidity of the company.
- Income statement , this shows us the profitability of the company.
- Financial statement, this shows us how the investment structure of the company is.
How is each state created?
In the case of the Cash Flow Statement , it consists of assigning each transaction an account, that is, assigning each entry and exit an activity, be it an operating activity, investment activity or financing activity ,
On the other hand , the income statement shows us the expenses and income of the company related to the product , that gives us the gross profit of the company, after applying taxes and depreciation we have the net profit of the company .
Finally, the financial statement shows us the relationship between Assets, Liabilities or Capital, that is, the Capital inflows as they are designated to the different acquisitions of assets or liabilities.
What is the difference between a cash statement and a cash flow?
The Cash Flow Statement assigns each transaction to an account , whether it is an operating activity, an investment activity or a financing activity , while the cash register only reports the company's inflows and outflows .
You should not make these statements by yourself, it is recommended that you have an accountant who can give you support, but it is ideal that you understand what each of these means, and what they tell you about the position and status of your company.
Image source: https://concepto.de/estados-financieros/