How can I understand charity financial statements?

How can I understand charity financial statements?

Charity financial statements provide insights into an organization's financial health. They typically include the statement of financial position, statement of activities, and cash flow statement. Would you like to know how to read each of these?

Yes, please explain the statement of financial position.

The statement of financial position shows the charity's assets, liabilities, and net assets at a specific point in time. Assets are what the charity owns, liabilities are what it owes, and net assets represent the difference. This helps assess the charity's financial stability.

What about the statement of activities?

The statement of activities outlines the charity's revenues and expenses over a period. It shows how much money was raised and spent, helping to evaluate the charity's operational efficiency and financial performance.

Can you explain the cash flow statement too?

Certainly! The cash flow statement tracks the cash coming in and going out of the charity. It is divided into three sections: operating, investing, and financing activities. This statement is crucial for understanding the charity's liquidity and cash management.