As we already mentioned, there are four main FS: balance sheet, statement of income, statement of cashflow, and statement of changes in stockholders’ equity.
Balance Sheet
The balance sheet is a listing of an entity’s resources (assets), obligations (liabilities), and owners’ claim (stockholders’ equity) at a point in time. It is, in essence, a snapshot of the organization’s financial position, frozen at a specific point in time.
Statement of Income
The statement of income main scope is to highlight whether an entity operates at a profit or loss. It reports results for a period of time and does not focus on a single date like the balance sheet. The statement of income is thus more like a movie than a snapshot.
Statement of Cashflow
The statement of cashflow is used to identify the sources and uses of cash during a distinct period. It is most useful to evaluate companies using Discounted Free Cashflow (DFC) and Adjusted Present Value (APV) analysis.
Statement of Changes in Equity
The statement of changes in equity, similarly to the income statement, does not focus on a single date. This statement reports in detail stockholders’ equity and illustrates the changes that occurred in the components of stockholders’ equity across a definite period.