Financial Statements Cheat Sheet

If you're in business, you MUST understand the 3 Financial Statements.

Here's a quick overview:

📄 INCOME STATEMENT

Main sections:

💰 REVENUE: Total Sales

➖ COST OF GOODS SOLD: The cost to deliver the product or service

💰 GROSS PROFIT: Revenue - Cost of Goods Sold

➖ OPERATING EXPENSES: All Overhead Costs

💰 OPERATING INCOME: Gross Profit - Operating Expenses

➖ OTHER INCOME: Money earned that is not core to the business

💰 PRE-TAX INCOME: Operating Income - Other Income

➖ INCOME TAX: Taxes paid to Governments

💰 NET INCOME: Pre-Tax Income - Income Tax

🔢 SHARES OUTSTANDING: The total number of shares a company has

➗ EARNINGS PER SHARE: Net Income / Shares Outstanding

👉 PURPOSE: Track Income & Expenses

🔀 SIMILAR TO: Your Monthly Budget

⏰ TIME: Period of Time

🔢 ACCOUNTING: Accrual

📄 𝐁𝐀𝐋𝐀𝐍𝐂𝐄 𝐒𝐇𝐄𝐄𝐓

3 Main Sections:

💰 ASSETS: What the company Owns

🔴 LIABILITIES: What the company Owes to creditors

🔵 EQUITY: The net value of the owner's claim

➗ FORMULA: Assets = Liabilities + Shareholder's Equity

👉 PURPOSE: Track what a company OWNS (assets) and OWES (liabilities)

🔀 SIMILAR TO: Your Net Worth statement

⏰ TIME: Point in Time Snapshot

🔢 ACCOUNTING: Accrual

📄 𝐂𝐀𝐒𝐇 𝐅𝐋𝐎𝐖 STATEMENT

3 Main sections:

💰 CASH FROM OPERATING ACTIVITIES

All of the cash flows from activities related to operating the business

💰 CASH FROM INVESTING ACTIVITIES

The cash movements from long-term assets

💰 CASH FROM FINANCING ACTIVITIES

The cash from all equity investments and debt from the company

👉 PURPOSE: Track Cash Movements

🔀 SIMILAR TO: Your Checking Account

⏰ TIME: Period of Time

🔢 ACCOUNTING: Cash

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