Understanding how to read the story that financial statements tell is a really useful skill and an important part of career development. In this course, we’ll give a basic overview of the 3 main financial statements: the Profit and Loss Statement, the Balance Sheet, and the Cash Flow Statement. We’ll teach what they show you, why it matters, and give you a bunch of practice problems to help retain that knowledge. After completing this course, you will be able to read, understand, and use financial statements and build on that knowledge as you continue to learn about them.
What you'll learn
Overviews of the Profit and Loss, Cash Flow, and Balance Sheet financial statements
What the most common line items on these statements mean and how they are used
The difference between profit and cash
Introducing Financial Statements
In this stage we introduce what financial statements are, how they are prepared, some very basic background about accounting principles, and the difference between cash and accrual accounting.
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The Concept of Recognition
Introducing Financial Statements Review
The Profit & Loss Statement
In this stage we introduce the Profit and Loss statement ("P&L")by explaining the different line items one can expect to encounter when reading a P&L.
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What is the Profit & Loss Statement
Cost of Goods Sold (“COGS”) and Gross Profit
Selling, General & Administrative (“SG&A”) and EBITDA
Depreciation, Amortization and EBIT
Interest, Taxes, Other Gains and Losses, and Net Profit
Profit & Loss Statement Assessment
The Balance Sheet
In this stage we introduce the balance sheet covering all the major sections and line items one will typically find on a balance sheet.
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What is the Balance Sheet?
Assets and Liabilities
Shareholder Equity & Retained Earnings
Balance Sheet Assessment
The Cash Flow Statement
In this stage we introduce the Cash Flow Statement, and the three subsections that it consists of.
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What is the Cash Flow Statement
Operating Cash Flows
Investing and Financing Cash Flows
Free Cash Flow and Net Cash Flow
Cash Flow Statement Assessment
Bringing It All Together
In this stage we'll show you how to retrieve financial statements online, how the teacher likes to read 10-k statements, the distinction between EBITDA and Net Profit as measure of profit, the difference between Book Value and Market Value, and some example of how the financial statements relate to one another.