Accounting rules

Financial Statements

Financial statements are very crucial to understand the financial performance of the company. These are instrumental and fundamental to assess and make a detailed analysis of any company. Here in this article I am giving some insights about these which will help readers to understand them. Balance Sheet A balance sheet is a financial statement as on date that reports company’s assets, liabilities, equity or net worth of the company Equation of Balance sheet: Assets= Liabilities + Owner’s equity Note: If liabilities are more than assets then owner’s equity will be in negative which indicates the company is suffering from poor financial health Potential stakeholders of balance sheet: Potential shareholders whether to invest or not in the company Banks/ Lenders to assess the financial health of the company before processing any loans to companies Regulatory authorities to scrutinize a company’s financial health Financial Ratios Important financial ratios calculated based on…