Financial Statements FBLA

Balance Sheet

statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement (Profit & Loss Statement)

shows revenues, expenses, and net income over a period of time.

Cash Flow Statement

records cash inflows and outflows from operating, investing, and financing activities.

Current Assets

assets expected to be converted into cash within one year (e.g., cash, accounts receivable, inventory).

Assets

resources controlled by a company expected to provide future economic benefits.

Statement of Changes in Equity

summarizes changes in shareholder equity, including issued shares, retained earnings, and dividends.

Non-Current Assets (Fixed Assets)

long-term resources like property, plant, equipment, or intangible assets.

Liabilities

obligations the company owes to outside parties.

Current Liabilities

obligations due within one year (e.g., accounts payable, short-term debt).

Revenue (Sales)

income earned from normal business operations.

Equity

residual interest in the assets after liabilities are subtracted; includes common and preferred stock, retained earnings, and additional paid-in capital.

Non-Current Liabilities (Long-Term Debt)

obligations due after one year (e.g., bonds payable, long-term loans).

Cost of Goods Sold (COGS)

direct costs of producing goods or services sold by the company.

Gross Profit

revenue minus COGS.

Operating Expenses

costs incurred to run the business excluding COGS (e.g., salaries, rent, marketing).

Earnings Per Share (EPS)

portion of net income allocated to each outstanding share of common stock.

Net Income (Profit)

total earnings after all expenses, taxes, and interest.

Operating Income (EBIT)

earnings before interest and taxes; gross profit minus operating expenses.

Dividends

portion of profits distributed to shareholders.

Retained Earnings

profits kept in the company to reinvest in operations rather than paid out as dividends.

Cash Flow from Operating Activities

cash generated from core business operations.

Liquidity Ratios

measure a company's ability to meet short-term obligations (e.g., current ratio, quick ratio).

Cash Flow from Financing Activities

cash flows from debt, equity issuance, or dividend payments.

Cash Flow from Investing Activities

cash used or received from buying or selling long-term assets.

Current Ratio

current assets ÷ current liabilities; measures short-term liquidity.

Quick Ratio (Acid-Test Ratio)

(current assets - inventory) ÷ current liabilities; stricter measure of liquidity.

Profitability Ratios

assess a company's ability to generate earnings (e.g., gross profit margin, net profit margin, return on equity).

Return on Equity (ROE)

net income ÷ shareholders' equity; measures how effectively equity is used.

Net Profit Margin

net income ÷ revenue; overall profitability.

Gross Profit Margin

gross profit ÷ revenue; indicates production efficiency.

Return on Assets (ROA)

net income ÷ total assets; efficiency of asset use.

Debt Ratios

measure financial leverage and solvency (e.g., debt-to-equity ratio, debt ratio).

Debt-to-Equity Ratio

total liabilities ÷ equity; indicates financial risk from leverage.

Inventory Turnover

COGS ÷ average inventory; efficiency of inventory management.

Efficiency Ratios

measure how effectively a company uses assets (e.g., inventory turnover, receivables turnover).

Interest Coverage Ratio

EBIT ÷ interest expense; ability to cover interest payments.

Accounts Receivable Turnover

net credit sales ÷ average accounts receivable; efficiency of collections.

Valuation Ratios

assess stock value relative to financial performance (e.g., price-to-earnings ratio, price-to-book ratio).

Price-to-Earnings (P/E) Ratio

market price per share ÷ EPS; indicates how much investors pay for $1 of earnings.

Operating Cash Flow Ratio

cash flow from operations ÷ current liabilities; liquidity from operations.

Cash Flow Ratios

assess ability to generate cash (e.g., operating cash flow ratio, free cash flow).

Price-to-Book (P/B) Ratio

market price per share ÷ book value per share; compares market value to accounting value.

Free Cash Flow (FCF)

cash remaining after capital expenditures; used for dividends, debt repayment, or reinvestment.

Trend Analysis

evaluating financial statement changes over multiple periods to identify patterns.

Horizontal Analysis

comparing financial statement items over time in dollar or percentage changes.

Comparative Analysis

comparing a company's financials with competitors, industry averages, or benchmarks.

Common-Size Statements

statements where each line item is expressed as a percentage of total revenue (income statement) or total assets (balance sheet).

Vertical Analysis

expressing financial statement items as a percentage of a base figure (e.g., revenue or total assets).

Financial Statement Notes

supplemental information explaining accounting methods, contingencies, and unusual transactions.

Auditor's Report

an independent evaluation of the accuracy and fairness of financial statements.

GAAP (Generally Accepted Accounting Principles)

accounting standards for financial reporting in the U.S.

Segment Reporting

financial performance broken down by business units, geographic regions, or product lines.

Sustainability and ESG Disclosures

financial and non-financial reporting on environmental, social, and governance impacts.

IFRS (International Financial Reporting Standards)

global accounting standards for financial reporting.

Ratio Analysis Integration

combining liquidity, profitability, efficiency, and leverage ratios to form a complete assessment.

DuPont Analysis

decomposes ROE into profitability, efficiency, and leverage components for deeper insight.

Trend Forecasting

using past financial data to predict future performance.

Red Flags

warning signs in financial statements, such as declining cash flow, excessive debt, or unusual accounting adjustments.

Valuation Modeling

using discounted cash flows (DCF), comparables, or precedent transactions to determine intrinsic value.

Scenario & Sensitivity Analysis

evaluating how changes in assumptions affect financial outcomes.

Financial Statement Fraud Indicators

signs of potential misstatement, e.g., inconsistent revenue recognition or inflated asset values.

EBITA

EBITA measures a company's operating performance by calculating earnings before deducting interest, taxes, and amortization expenses. It is a way to evaluate the company's core profitability, excluding financing costs and non-cash amortization of intangible assets.

Financial Statements

formal records of a company's financial performance and position, used to evaluate profitability, liquidity, and risk.