What is Common Size Analysis? Common Size analysis is an accounting method used to measure each line item on the financial statements as a percentage of a base or common figure. For example, Revenue is often used as the base figure on the income statement. This means that all the line items such as cost… Continue reading
What’s the Difference Between Cash Flow and Profit? In previous blogs, we’ve covered the Income Statement and Cash Flow Statement. It’s important for investors, especially those new to financial statements, to understand the differences between Cash Flow and Profit. While they are often used interchangeably, Cash Flow and profit are not the same. In a… Continue reading
Working Capital is the cash needed for a business to carry on operating and covering short-term obligations. Understanding a business’s Working Capital needs is a great way to measure the near-term liquidity and risk factors of a business to carry on day-to-day activities. It can provide investors insights into the operating efficiency of the business… Continue reading
Cash Flow is the movement (flow) of money that comes in and out of a business. Money that moves out (Spent) is known as Cash Outflows while money that moves in (Received) is known as Cash Inflows. Cash Flow is different to earnings as it is a real snapshot of when a business receives money… Continue reading
Accounting Standards are guidelines and rules governing how corporations prepare and present their financial statements. These Standards ensure companies use the appropriate procedures and principles in their accounting methods. Without Accounting Standards, companies could report, present, and adopt any accounting method they choose which would always showcase their financial position and operations in the best… Continue reading
All three financial statements are connected although they appear and are represented independently. Investors need to understand how to link the income statement, balance sheet and cash flow statement together. By understanding the transactions and how one change flows through to other statements investors can gain greater insights into a company’s business model. With this… Continue reading
A Cash Flow Statement is the last of the three financial statements that records all the incoming and outgoing cash of the business. It connects the income statement and the balance sheet by showing how cash has flowed throughout the business. The Cash Flow Statement unlike the other statements is a record of the actual… Continue reading
A Balance Sheet is one of the fundamental financial statements of a company, also known as the “Statement of Financial Position”. It is comparable to the “Net Worth” of the business and represents a snapshot of the assets, liabilities, and shareholder’s equity at a particular point in time. The Balance Sheet is the most critical… Continue reading
An Income Statement is a financial report that shows how much revenue and expenses a company accrues over a particular period. Also known as the Profit and Loss Statement, the Income Statement is one of the 3 key financial statements. This Statement gives insights into a company’s performance, operations, profitability and management efficiency. TABLE OF… Continue reading
Financial Modelling is a process that recreates a hypothetical forecasted scenario of a company’s future operations and financials. Financial modelling uses past data and creates a summary of the company’s likely projected expenses and earnings that can guide investment decisions. Modelling is most used in corporate finance and includes using various models such as the… Continue reading
