The Basic Financial Statements Explained

Accurate and timely produced financial statements are an important aspect of a medium to small sized business with lenders, or growth plans that may include investors.  Randolph Business Resources provides many financial statements on an on-going basis, tailored to the needs of each particular client, including cash flow statements, balance sheets, and income statements.

The cash flow statement shows the progression of cash in a stated period of time.  There are typically three parts:  the operating activities, the investing activities and financing activities.  The operating activities show changes in cash due to operations.  Investing activities explains cash changes due to investment or long term asset changes, and the financing activities report cash received through major events like issuance of stick, long-term debt and retiring long-term liabilities.

The balance sheet organizes financial information based on a specific time frame as well, typically an established accounting period of 4 weeks time.  The assets section includes cash (from the cash flow statement), money owed from customers, inventory, and fixed assets such as the building and equipment.  The liabilities section includes any money due to be paid out by the end of the accounting period.  And the Stockholders’ equity section is generally defined as the difference between the assets and liability sections.

The Income Statement shows the profitability of a company during a specific period of time.  This could be an accounting period of the usual 4 weeks, or monthly, quarterly or annually.  This report shows revenues, expenses, gains, and losses.  It is common for even small companies to receive a number of these reports on a regular basis.  With Randolph Business Resources, you always get a full explanation of the numbers, and interpretation of the information to help guide future financial decisions for the business.