What is a Financial Statement?

A financial statement is a report that shows a company’s money matters—how much it earned, spent, owns, or owes. It helps people like owners, investors, and banks understand the company’s money situation.

Think of it this way: if you run a small shop and write down monthly sales, costs, and profit, that record is like a financial statement.

Financial statements are important because they:

1. Help the company see its financial health.
2. Show investors if it is safe to invest.
3. Help banks and governments track money and taxes.
   

Example:
“ABC Traders” sells $5,000 in a month. Its costs are $3,000. Profit = $2,000. Financial statements record this information clearly.

Types of Financial Statements

Most companies make four main types of financial statements:

1. Balance Sheet
2. Income Statement
3. Cash Flow Statement
4. Statement of Changes in Equity
   

Each one shows different financial information.

Balance Sheet

The Balance Sheet shows:

• What the company owns (assets)
• What the company owes (liabilities)
• The owner’s investment (equity)
  

Key Parts of a Balance Sheet

1. Assets (What the company owns)
   
   • Current Assets: cash, products, money owed by customers
   • Fixed Assets: buildings, machines, vehicles
   • Intangible Assets: brand, patents, software
     
2. Liabilities (What the company owes)
   
   • Short-term: bills, salaries, small loans
   • Long-term: bank loans, big debts
     
3. Owner’s Equity
   
   • Owner’s money invested
   • Profits kept in the business
     

Example:
Total assets = $500,000
Liabilities = $300,000
Owner’s equity = $200,000
Formula: Assets = Liabilities + Owner’s Equity

Income Statement

Also called Profit and Loss Statement, this shows how much money a company earned and spent in a period.

Main Parts:

• Revenue: Money from selling products/services
• Expenses: Costs like salaries, rent, electricity
• Net Income: Revenue minus Expenses (profit or loss)
  

How to see profit/loss:

• Revenue > Expenses → Profit
• Revenue < Expenses → Loss
  

📘 Example:
Earnings = $50,000
Expenses = $35,000
Net income = $15,000

Cash Flow Statement

Shows where cash comes from and goes. It helps check if the company has enough money to pay bills.

Cash Inflows and Outflows:

• Inflows: Sales revenue, loans, new investment
• Outflows: Salaries, bills, loan payments
  

Three sections:

1. Operating Activities: Daily business cash
2. Investing Activities: Buying/selling equipment or property
3. Financing Activities: Loans or issuing shares
   

Example:

• Cash from sales = $100,000
• Cash spent = $70,000
• Loan repayment = $10,000
• Ending cash = $20,000

Statement of Changes in Equity

Shows changes in the owner’s investment over time.

Tracks:

• New money added by owner
• Profit made
• Dividends paid
  

Example:
Starting equity = $200,000
Profit = $50,000
Dividends = $10,000
Ending equity = $240,000

Why Financial Statements are Important

Financial statements are like a mirror for a business.

They help:

1. Managers make decisions – reduce costs or increase spending.
2. Investors decide – is it safe to invest?
3. Banks approve loans – they check profit and cash.
4. Taxes – governments calculate taxes correctly.
5. Build trust – investors see the business is honest and transparent.
   

Simple way to think:
Just like a school report card shows how well a student is doing, financial statements show how well a business is doing.

Tips to Analyze Financial Statements

1. Compared with last year – see trends in income and expenses.
2. Check profit margin – profit vs revenue.
3. Look at cash flow – enough cash for bills?
4. Identify big expenses – cut unnecessary costs.
5. Debt vs Equity – too much debt = risky.
   

Common Mistakes

1. Wrong calculations – numbers don’t match.
2. Misclassification – expenses recorded as income.
3. Old data – not updated.
4. Missing notes – no explanation for numbers.
5. Ignoring cash flow – profit shown, but no actual cash.
   

Mistakes can mislead investors and banks.

Key Features of Our Services

Compilations

• At this stage, we collect information provided by the company’s management and generally prepare financial statements.
• Here we do not provide any opinions and do not perform in-depth Q&A or analytical tests.

Analysis & Commentary

• Not just a presentation — we interpret the numbers and highlight trends to understand where the strengths and weaknesses of the business lie.
• For example: profit margin changes, cost structure analysis, capital expenditure analysis, etc.

Custom Reports

   Some of our sample reports:

• Projection Reports / Future Forecasts — To determine future trends and plans
• Job Costing Reports — Project-based cost analysis
• Depreciation Reports — Capital asset shortage and measurement
• Cash Flow Statements, Balance Sheets, Income Statements — Comprehensive financial reports at every step

Other special reports that will be created according to your business type and needs

Customized Advice & Recommendations

• Not just the rule of numbers — we will recommend how to reduce costs, how to increase revenue, how to make capital investments more effective.

Compliance & Standards

• We follow international and local accounting standards (such as IFRS, GAAP or country-specific standards).
• We prepare reports according to the needs of taxpayers and regulatory agencies, so that there are no complications later.

Why choose our services?

• Expert Team: Our team consists of experienced accountants and analysts.
• Transparent and Credible: We maintain transparency in all information and procedures.
• Business-Changing Services: Whether you run a small, medium or large business—we can provide services in that style.
• Timely Delivery: We will deliver reports and analysis within the stipulated time.

Our Process (Step-by-step Process)

First, an initial discussion about your business and financial situation.

• Requesting our data — such as: balance sheet, income and expense statement, cash flow, transaction data, etc.
• Data verification and data cleaning / preparation.
• Compilation, analysis and report creation.
• Report presentation and interpretation.
• Implementation of recommendations and follow-up if necessary.

Final Thoughts

Financial statements are very important for any business.

They:

• Show financial health
• Help plan for the future
• Build transparency and trust
  

📘 Remember:

A business that does not track its finances cannot survive long-term.”