We believe this section might turn some people away (We know we did initially) due to the amount of confusing numbers here and there. However, financial statements are important in evaluating a company financial status and to understand how the company has progress so far and to certain extent, how the company will progress going ahead.

Financial statements are important to investors as it paints the picture of how a company is allocating and using the funds you and other shareholders have entrusted it with. There are 3 parts to a financial statement.

1. Income Statement or Profit and Loss (P&L) Statement or Earnings Statement
2. Balance Sheets or Statements of Financial Position
3. Statements of Cash Flows

We will be going through each part in the subsequent lectures in details. Likewise, we will highlight the important numbers and ratios you need to consider and what each means. Do not worry if you get lost anywhere, for you can keep returning to these lectures to review. Also, we have included checklists and tools you can make use of, and which will help remind you of what to look out for in the financial statements.

One important thing to take note of before we go through all the financial statements is that you need to check for any changes in accounting policy by the company without real reason. You can do so by looking through and comparing the past year annual reports. If accounting policy is changed from time to time and without reasons, this is likely to mean that the accounts are manipulated to make the financial statements look nice on paper.

So let us get started as we walk you through the financial statements.