Financial Statement Examples
The following financial Statement example
There are three major financial statements:
#1 Balance Sheet Example
The balance sheet shows the assets, liabilities, and shareholder’s equity of the Company in a particular format. Consider the example of Apple (consolidated balance sheet)
Source: Apple.Inc
Current Assets
Current Assets are the assets that convert into cash in less than one year. The assets of the Company include:
- Cash and Cash Equivalents: These are the cash deposits of the Company in the bank account or invested in securities that convert into cash in 1-2 days.
- Marketable Securities: They are highly liquid securities and can be converted to cash very easily.
- Account Receivables: Accounts Receivables are the amount that the Company will receive from its customers and expects to receive in less than one year.
- Inventories: Inventories are finished goods, raw materials, and goods in progress held with the Company.
- Vendor Non-Trade Receivable: Vendor non-trade receivables include the non-trade items of the Company with its vendors, and it expects to receive them in less than one year.
- Other Current Assets: Other current assets include assets that cannot add up in the above buckets. Hence, they list as other current assets.
Non-Current Assets
Non-Current Assets are long term assets of the Company which it expects to convert into cash in more than one year:
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- Marketable securities under non-current assets are an investment by the Company in exchange-traded securities, which it expects to mature after one year.
- Property, plant, and equipment, as the name suggests, are the investments of the Company in the property for building offices, factories, manufacturing hubs or warehousing, and equipment used to manufacture the products of the Company.
- Other non-current assets are the non-current assets of the Company, which cannot be segregated under above mentioned non-current assets.
Current Liabilities
Current Liabilities of the Company are the liabilities it owes to the vendors, banks, investors of commercial paper, etc. and these liabilities will mature in less than one year.
- Accounts payable includes the payment to be made by the Company in the next one year. These paments may be to the vendors or suppliers for sourcing raw material and other services.
- Deferred revenue records when the Company has accepted the payment, but the goods and services are not yet provided to its customers.
- Commercial paper is a debt security issued by the Company to raise money from the public.
- Term debt is a loan to be repaid to banks and financial institutions.
- Other current liabilities include liabilities of the Company, which don’t feature into any of the above liabilities.
Non-Current Liabilities
Non-Current Liabilities are the liabilities which the Company is liable to pay in more than one year.
- Deferred revenue in non-current liability is the same as under current liabilities, but the Company will provide goods and services after one year.
- Term debt is long term loan taken by the Company from banks and financial institutions.
Shareholders Equity
Shareholders Equity includes the initial amount invested by the shareholders of the Company and retained earnings, i.e., the amount earned by the Company over the years of its operations.
#2 Income Statement Example
The second financial statement is that of Income Statement. It gives details about the financial performance of the Company over some time. It provides income and profit earned by the Company. Consider the below snapshot of the statement of operations for Apple Ince.
Source: Apple Inc
- Net Sales are the sales of the Company from the goods sold by it during the year.
- Cost of sales is the cost incurred by the Company for manufacturing and its sales.
- The gross margin is net sales minus the cost of sales.
- Research and development expenses are the expense incurred by the Company on research and development purposes.
- Selling, general and administrative expenses include marketing and sales expense, other expenses like office supplies, and other administrative expenses required for running the operations of the Company.
- Other income is any other income from the sale of some investment or from interest earned on bank deposits etc. which is earned by the Company during the period the income statement generates.
- Provision for income taxes is the tax paid by the Company to the government for income generated.
- Net Income is the profit earned by the Company. It is calculated by subtracting all the expenses, taxes from the sales amount, and other income.
#3 Statement of Cash Flow Example
The cash flow statement includes the cash inflows or outflows by the Company during the period.
Source: Apple.Inc
It includes three types of cash flows:
- Cash flow from operating activities: This includes various items from which there is cash inflow or outflow due to the operating activities of the Company.
- Cash flow from Investing activities: It includes cash inflow or outflow due to investments of the Company. If the Company makes a new investment, it will pay some amount and is recorded as a cash outflow, or if it sells its investments or some investment securities mature, it will receive cash and is recorded as a cash inflow.
- Cash flow from financing activities: It includes cash inflow or outflow from financing activities like issuance of stocks, dividend payments, buyback of stocks, payment of term debt or issuing commercial paper, etc.
Conclusion
The financial statements of the companies are a bit complex, and they are interlinked with amounts on financial statements reflects in another statement in a different form. Hence, while analyzing the Companies performance, all the financial statements should be read and analyzed together. These statements reflect the various business activities of the Company.
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