3.3.1
- Income statement items
While the balance sheet constitutes a financial "snapshot"
at a given point in time (such as December 31), the
income statement summarizes a financial "movie"
of operational results over a period of time (such as
for the year ending December 31). It shows performance
-- the company's revenues minus expenses equal net income.
(More 3.3.1>>)
3.3.2 - Income statement analysis
For most analytic purposes, information about past
earnings and prospects of future earnings is more useful
than information about property and assets. An old axiom
is that assets are worth only what they can earn. Assets
that have no earning capacity are salable only for scrap.
Hence, more reliance is usually placed on the income
statement ratios compared to the balance sheet ratios.
Sometimes "income statement ratios" actually
compare items on the income statement and the balance
sheet. (More 3.3.2>>)
3.3.3 - Statement of cash flows
The statement of cash flows covers the same period
as the income statement it accompanies and shows from
what sources the company received its cash flow (which
is net income plus an add-back of depreciation and other
non-cash charges that were subtracted from the company's
revenues when calculating its net income.) (More
3.3.3>>)
|
3.2 Balance Sheet
