1. USERS
1.1. 1. Management 2. Owners 3. Investors 4. Creditors . 5. Government 6. Employees 7. Customers 8. General Public
2. 3.The statement of retained earnings
2.1. A statement reporting how much of the firm’s earning were retained in the business rather paid as dividend.
3. 4. Statement of Cash Flows
3.1. Provides a summary of the changes in company’s cash position.
3.2. operating activities: cash flow associated with production and sale of product and services (i.e., net income, depreciation, collection of account receivables)
3.3. investment activities: cash flow related to purchase and sale of both fixed assets or business interest
3.4. financing activities: cash flows as a result from debt (short- or long-term debt), sale of stock, or pay cash dividends)
4. 2.INCOME STATEMENT
4.1. The income statement provides a financial summary of a company’s operating results during a specified period.
4.2. Revenues - Expenses = Net Income
4.3. Sales revenue – Cost of goods sold (COGS) = Gross profit – Selling, general and administrative costs (SG&A) – Research and development (R&D) = Earnings before interest, taxes, depreciation and amortization (EBITDA) – Depreciation and amortization = Earnings before interest and taxes (EBIT) – Interest expense = Earnings before taxes (EBT) – Taxes = Net income The net income on the income statement, if positive, shows that the company has made a profit. If the net income is negative, it means the company incurred a loss. Earnings per share can be derived from knowing the total number of shares outstanding of the company: Earnings per Share = Net Income / Shares Outstanding
5. 1.BALANCE SHEET
5.1. what's that?
5.1.1. shows the current financial position of the firm, at a given single point in time. It is also called the statement of financial position
5.1.2. Assets = Liabilities + Shareholders’ Equity
5.1.3. Current Assets Current assets held by the firm refer to cash and cash equivalents. These cash equivalents are assets that can be easily converted into cash within one year. Current assets include marketable securities, inventory and accounts receivable. Long-term Assets Long-term assets are also called non-current assets and include fixed assets like plant, equipment and machinery, and property, etc. A firm records depreciation of its fixed, long-term assets every year. It is not an actual expense of cash paid, but is only a reduction in the book value of the asset. The book value is calculated by subtracting the accumulated depreciation of prior years from the price of the assets. Total Assets = Current Assets + Book Value of Long-Term Assets Current Liabilities Current liabilities of the firm are obligations that are due in less than one year. These include accounts payable, deferred expenses and also notes payable. Long-term Liabilities Long-term liabilities of the firm are financial payments or obligations due after one year. These include loans that the firm has to repay in more than a year, and also capital leases which the firm has to pay for in exchange for using a fixed asset. Shareholders’ Equity Shareholders’ equity is also known as the book value of equity or net worth of the firm. It is the difference between total assets owned by a firm and total liabilities outstanding. It is different from the market value of equity (stock market capitalization) which is calculated as follows: number of shares outstanding multiplied by the current share price.