This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Financial Statements show how a business is doing financially. They help stakeholders understand the performance and financial position of the business.
There are three main types of financial statements:
Balance Sheet Equation: Total Assets = Total Liabilities + Equity |
Income Statement Equation: Sales Revenue – Expenses = Profit |
Cash Flow Statement Equation: CF from Operations + CF from Investing + CF from Financing = Net Change in Cash |
Note: See Cash Flow Statement for the actual analysis.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"