Financial statements explained is the topic of this blog (and vlog). And it will serve as a guide to you so that you can better understand them.
Why do you need to know about financial statements?
Because the financial statements form the bedrock of any company. Therefore, understanding them and how they work gives you insight and clarity.
In this video, I’ll walk you through:
- What each statement is,
- The content of those statements,
- Why it’s important to understand these documents.
Financial statements explained
There are 3 types of financial statements, and they are:
1. The cash statement
It summarises where the cash in your business comes from, and where it goes.
2. The profit statement
Also called the P&L, or profit/loss statement. It shows you your company’s profit and loss over a given period of time.
3. The balance sheet
It’s a financial statement of the assets and liabilities of a business at one particular point in time.
Undoubtedly, these documents give you, as a business owner, the numbers of the company and show you:
- how your business is performing financially, and
- where you stand in terms of your cash flow.
Certainly, this can be overwhelming for any business owner. However, with the right information and tools it doesn’t have to be so hard! So in this video, I’m going to break down some common financial statements every business owner should know. As a result of watching this video, you will have a basic understanding of what these financial documents are all about as well as what they mean for your business. So let’s get started!
In conclusion, understanding financial statements and how your business is performing financially, and where you stand in terms of your cash flow can be overwhelming. But it doesn’t have to be that way! In this blog post, I’ve broken down some common financial statements every small business owner should know about including balance sheets, profit & loss statements, and cash flow.
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