The Three Key
Financial Statements
The financial statements are a record of the financial activities of a business.
Balance sheet
Statement of financial position
Total Assets
Current assets
e.g. cash, inventory, accounts receivable
Non-current assets
e.g. property, plant and equipment, technology, patents, trademarks
Tangible
Intangible
Total Liabilities and Equity
Current liabilities
e.g. accounts payable
Non-current liabilities
e.g. long-term debt
Shareholders’ equity
e.g. common shares and retained earnings
Income Statement
Statement of Profit and Loss
Revenues
Direct operating cost
e.g. Cost of goods sold
Gross profit
Indirect operating cost
e.g. R&D, administration, selling, distribution
Operating income = Earnings Before Interest and Taxes
Cost of debt financing
e.g. Interest, bank charges
Tax
Net income