Accounting Basics

1. Profit and Loss Report

1.1. Revenue/Sales

1.2. Cost of Goods Sold

1.3. Expenses (Overhead)

1.4. Net Income/Loss

2. Balance Sheet Report

2.1. Assets

2.1.1. Current

2.1.2. Long-Term

2.2. Liabilities

2.2.1. Current

2.2.2. Long Term

2.3. Owner's Equity

2.3.1. Paid-in Capital

2.3.2. Retained Earnings

3. Purpose

3.1. Detailed Information for Decision Making

3.2. Monitor Business Activities

3.3. Accountability and Transparency

3.4. Prevent Fraud

4. Ratio Analysis

4.1. Solvency

4.1.1. Total Assets Turnover - Revenue/Total Assets

4.1.2. Debt Ratio = Total Debt/Total Assets

4.2. Liquidity

4.2.1. Current Ratio = Current Assets/Current Liabilities

4.2.2. Quick Ratio = Current Assets - Inventory/Current Liabilities

4.3. Profitability

4.3.1. Net Profit Margin = Net Income/Revenue

4.3.2. Earnings Per Share = Net Income/No. of Share Outstanding

4.3.3. Return on Total Assets = Net Income/Total Assets