Financial Statements Reveal Durable Company

Financial statement can reveal whether the company that we interested in will generate money to us consistently. When we looking in the financial statement, we looking on the “consistency”. Will this company able to generate income with high gross margin consistently? Will this company able to maintain the expenses consistently. Will this company able to generate the earnings consistently?

This consistency is important to us for long term investment.

When we look into the financial statement, there always have 3 statement which named as income statement, balance sheet and cash flow statement. Each statements provide us important information on the company that we interested in.

Income statement reveal how much the company has earned during its operation. This statement will be released every 3 months period by accountants and the whole fiscal year. Info can be get from this statement are company’s margin, return of equity, its consistency earnings, etc.

Balance sheet reveal how much the company has the money in the bank and how much it’s owes. The net worth of the company can be known after deduct all the debts from their account. The balance sheet was generated every 3 month period which called as quarter and at the end of the accounting or fiscal year.

Lastly, the cash flow statement track the flow of the cash either in or out of the business. We can know how the company spend their capital in their improvements.