Financial Statement

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 67 (17955 words) Published: February 18, 2013


Financial Statement Analysis
Small Businesses

A Resource Guide

Provided By

Virginia Small Business Development Center Network

(Revised for the VSBDC by Henry Reeves 3/22/2011)


|Topic |Page | |Introduction |3 | |Importance of Financial Statements |4 | |Collecting and Managing Data |5 | |The Income Statement |7 | |The Balance Sheet |9 | |Reconciliation of Equity or Statement of Changes in Stockholder Equity |12 | |Statement of Cash Flows |12 | |Notes to Financial Statements |13 | |Financial Ratios – Explanation |13 | |Key Terms and Concepts |20 | |Financial Statements as a Management Tool |24 | |Three Case Studies |32 | |Figure 1: Summary Table of Financial Ratios |36 | |Figure 2: K-L Fashions, Inc. Financial Statements |38 | |Figure 3: Breakeven Analysis |46 | |Figure 4. - Sample Cash Flow Statement (without numbers): |47 | |Conclusion |48 | |Sources of Financial Analysis Information |49 | Introduction

Financial statements provide small business owners with the basic tools for determining how well their operations perform at all times. Many entrepreneurs do not realize that financial statements have a value that goes beyond their use as supporting documents to loan applications and tax returns.

These statements are concise reports designed to summarize financial activities for specific periods. Owners and managers can use financial statement analysis to evaluate the past and current financial condition of their business, diagnose any existing financial problems, and forecast future trends in the firm’s financial position.

Evaluation pinpoints, in financial terms, where the firm has been and where it is today. Diagnosis determines the causes of the financial problems that statement analysis uncovers and suggests solutions for them.

Forecasts are valuable in statement analysis for two reasons: You can prepare forecasts that...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on What are Corporate Financial Statements (Report and Accounts) good for and what do they not tell you?
  • Financial Ratio Essay
  • Fundamentals of Financial Reporting Essay
  • Financial Management 555 Assessment 2 Essay
  • Causal Effect of Creative Accounting on Financial Reporting and Decision Making. Essay
  • Financial Analysis Xacc280 Final Project Essay
  • Essay on Financial Accounting Assignment: You Are an Entrepreneur
  • Srategic Financial Analysis Unit 1 Essay

Become a StudyMode Member

Sign Up - It's Free