How do I interpret financial statements?

How do I interpret financial statements?

Interpreting financial statements involves analyzing the balance sheet, income statement, and cash flow statement to assess a company's performance.

What key ratios should I look at?

Key ratios include the current ratio, debt-to-equity ratio, return on equity, and profit margins. These help evaluate liquidity, profitability, and financial health.

Can you explain the income statement in detail?

Sure! The income statement shows a company's revenues, expenses, and profits over a specific period. It starts with sales, subtracts costs, and ends with net income.

What is the difference between cash flow and profit?

Profit is the income after expenses, while cash flow measures the actual cash generated or used in a period. They can differ due to non-cash expenses.