Financial statement analysis

Hi there! Do you know what a financial statement is? It's like a report card for a company's money. Financial statement analysis means looking at this report card and figuring out how the company is doing with its money.

There are three main financial statements: the income statement, the balance sheet, and the cash flow statement.

The income statement tells us how much money the company made (also called revenue) and how much it spent (also called expenses). We can use this statement to figure out if the company is making more money than it's spending (income is higher than expenses).

The balance sheet shows us what the company owns (assets) and how much it owes (liabilities). We can use this statement to see if the company has more assets than liabilities. If it does, that's great news because it means the company has a lot of resources to work with.

The cash flow statement tells us how much money the company received and spent in cash. It's kind of like a diary of all the company's money activities. We can use this statement to see if the company has a lot of money coming in and going out.

By looking at all three financial statements, we can get a really good understanding of how the company is doing financially. If the company is doing well, people might want to invest in it. If the company is not doing well, people might not want to invest in it.

Does that all make sense?