Financial Statements Quiz

Financial Statements

• Balance Sheet: Snapshot of a company's financial position at a specific point in time, including:
  • Assets (cash, inventory, property)
  • Liabilities (debts, loans)
  • Equity (owner's stake, shareholder value)
• Income Statement (Profit & Loss Statement): Summary of revenues and expenses over a specific period, including:
  • Revenues (sales, interest)
  • Expenses (cost of goods sold, operating expenses)
  • Net Income (profit or loss)
• Statement of Cash Flows: Summary of cash inflows and outflows over a specific period, including:
  • Operating Activities (net income, depreciation, changes in working capital)
  • Investing Activities (purchases/sales of assets)
  • Financing Activities (loans, dividends)

Cash Flow Analysis

• Cash Flow: Movement of cash into or out of a business, including:
  • Cash Inflows: revenues, loans, asset sales
  • Cash Outflows: expenses, loan repayments, asset purchases
• Cash Flow Classification: Categorization of cash flows into:
  • Operating Cash Flow (OCF): cash generated from core business activities
  • Investing Cash Flow (ICF): cash related to investments in assets
  • Financing Cash Flow (FCF): cash related to financing activities
• Cash Flow Analysis Techniques:
  • Cash Conversion Cycle: measures the length of time between cash outlays and cash inflows
  • Cash Flow Margin: measures profitability in terms of cash generated per dollar of sales
  • Free Cash Flow (FCF): measures a company's ability to generate cash for investments or debt repayment

Financial Statements

• A balance sheet provides a snapshot of a company's financial position at a specific point in time, including assets, liabilities, and equity.
• Assets include cash, inventory, and property.
• Liabilities include debts and loans.
• Equity represents the owner's stake and shareholder value.

Income Statement (Profit & Loss Statement)

• An income statement summarizes revenues and expenses over a specific period.
• Revenues include sales and interest.
• Expenses include cost of goods sold and operating expenses.
• Net income represents the profit or loss.

Statement of Cash Flows

• A statement of cash flows summarizes cash inflows and outflows over a specific period.
• Operating activities include net income, depreciation, and changes in working capital.
• Investing activities include purchases and sales of assets.
• Financing activities include loans and dividends.

Cash Flow Analysis

• Cash flow refers to the movement of cash into or out of a business.
• Cash inflows include revenues, loans, and asset sales.
• Cash outflows include expenses, loan repayments, and asset purchases.

Cash Flow Classification

• Cash flows can be categorized into operating cash flow (OCF), investing cash flow (ICF), and financing cash flow (FCF).
• Operating cash flow (OCF) is cash generated from core business activities.
• Investing cash flow (ICF) is cash related to investments in assets.
• Financing cash flow (FCF) is cash related to financing activities.

Cash Flow Analysis Techniques

• Cash conversion cycle measures the length of time between cash outlays and cash inflows.
• Cash flow margin measures profitability in terms of cash generated per dollar of sales.
• Free cash flow (FCF) measures a company's ability to generate cash for investments or debt repayment.