Interpreting financial statements

• The Income Statement reports a company's financial performance over a specific period
• What does the Cash Flow Statement track for a company?

  Movement of cash
• What three activities does the Cash Flow Statement track to show the movement of cash?

  Operating, investing, financing
• The Income Statement summarizes a company's profitability over a specific period
• High assets and equity with manageable liabilities suggest a strong financial position.

  True
• The Income Statement reports financial performance over a specific period
• What are the three key financial statements used by businesses to track their performance?

  Income Statement, Balance Sheet, Cash Flow Statement
• The Balance Sheet provides a snapshot of a company's assets, liabilities, and equity at a specific point in time
• The Balance Sheet provides a snapshot of a company's financial position, showing its assets, liabilities, and equity
• Match the financial statement with its purpose:

  Income Statement ↔️ Measures profitability

  Balance Sheet ↔️ Shows financial position

  Cash Flow Statement ↔️ Tracks cash movement
• The Gross Profit is calculated by subtracting the cost of goods sold from the company's total revenue
• What does a positive cash flow from operating activities indicate for a company?

  Healthy core business
• The Income Statement measures a company's profitability over a specific period.

  True
• The balance sheet provides a snapshot of a company's financial position at a specific point in time.


  True
• Gross profit is calculated as revenue less the cost of goods sold.


  True
• What is the purpose of analyzing cash flow from operating activities?

  Assess ability to generate cash
• Liquidity ratios assess a company's ability to meet short-term obligations.


  True
• Match the financial metric with its purpose:

  Revenue ↔️ Indicates income generated by the business

  Expenses ↔️ Calculates the cost of producing goods

  Net Profit ↔️ Shows the final profit after taxes
• What are the three key financial statements used to understand a business's performance?

  Income Statement, Balance Sheet, Cash Flow Statement
• What does the cash flow statement track?

  Movement of cash
• What is the final profit available to shareholders called?

  Net Profit
• Financing activities include the issuance of debt or repayment of loans
• Solvency ratios evaluate a company's long-term financial stability and debt management
• Comparing performance against benchmarks allows assessment of a company's competitiveness and financial health
• What does the Income Statement show about a company's financial performance?

  Revenue, expenses, profit/loss
• The Income Statement measures a company's profitability over a specific period by showing revenue, expenses, and net profit/loss.


  True
• The Income Statement helps assess a company's ability to generate profits.


  True
• What does the "Revenue" component of the Income Statement indicate?

  Total income generated
• Match the section of the Cash Flow Statement with its activity:

  Operating Activities ↔️ Day-to-day business operations

  Investing Activities ↔️ Purchase or sale of assets

  Financing Activities ↔️ Related to funding
• What three items does the Balance Sheet show about a company's financial position?

  Assets, liabilities, and equity
• The income statement measures a company's profitability
• The income statement includes revenue, which represents total earnings from sales of goods
• Match the balance sheet component with its definition:

  Assets ↔️ What the company owns

  Liabilities ↔️ What the company owes

  Equity ↔️ The owners' stake in the company
• Order the following profitability ratios from least to most specific:

  1️⃣ Gross Profit Margin

  2️⃣ Operating Profit Margin

  3️⃣ Net Profit Margin
• What do efficiency ratios measure?

  Use of assets and resources