The Layman’s Guide to Understanding Financial Statements Quotes

“There are three key financial statements that are made up of 5 main elements. These elements include: 1. Assets: Assets are items of value that are owned by the company. Items that can be listed under assets include cash, equipment, real estate, etc. 2. Liabilities: These are items that decrease the net worth of the business. In other words, liabilities are what the company owes other companies, individuals, or investors. Liabilities include items such as accounts payable, long term and short term loans, etc. 3. Equities: These refer to cash or cash equivalents that are used to represent the ownership of the company. The term equity, as used in accounting, determines the value of the company and its ownership. 4. Revenues: Revenue is one component of financial statements that mainly appears on the income sheet and the cash flow statement. Revenue represents all the money that is earned by a business over a given trading period. The revenue of a business can vary from one accounting period to another. The revenue of a business determines the net income of business after expenses have subtracted. 5. Expenses: The expenses of a business are usually used in preparing the income sheet and the cash flow statement. Expenses represent the ways a company uses its funds. Among the expenses include direct expenses such as the cost of goods sold and indirect expenses such as rent and taxes.”
― Simon J. Lawrence, The Layman’s Guide to Understanding Financial Statements: How to Read, Analyze, Create & Understand Balance Sheets, Income Statements, Cash Flow & More

“Do not be quick to pay your supplier before your customers pay for their goods.”
― Simon J. Lawrence, The Layman’s Guide to Understanding Financial Statements: How to Read, Analyze, Create & Understand Balance Sheets, Income Statements, Cash Flow & More

“Convert your net income from operating activities to net cash (flows): The cash flow statement also helps in converting the earnings from operating activities to cash.”
― Simon J. Lawrence, The Layman’s Guide to Understanding Financial Statements: How to Read, Analyze, Create & Understand Balance Sheets, Income Statements, Cash Flow & More