Skip main navigation

£199.99 £139.99 for one year of Unlimited learning. Offer ends on 28 February 2023 at 23:59 (UTC). T&Cs apply

Find out more

What are financial statements?

learn more about financial statements.
A financial statement
consists of three components: a balance sheet, the statement of income, and statement of changes in equity. A balance sheet is also known as the statement of financial position, which reports the financial position at a specific point in time. It consists of three elements.
Assets: these are resources controlled by the firm.
Liabilities: amounts owed to lenders and other creditors.
Owner’s equity: the interest in the net assets that remain after deducting liabilities. Thus, assets equals liabilities plus owner’s equity. Here is an example of a statement of financial position from the Woolworths Group Annual Report 2019. You’ll notice items for current assets, noncurrent assets, current liabilities, noncurrent liabilities, and equity. The statement of income is also known as the statement of profit and loss. This reports on the financial performance of the firm over a period of time, the same period of time as the balance sheet. It has various elements, revenues, expenses, and other income. Here is an example of a statement of profit or loss from the Woolworths Group Annual Report 2019.
A cashflow statement is the final component of a financial statement. This focuses on the company’s cash receipts and payments.
In particular, it focuses on: operating cash flows, the cash effects of transactions that involve the normal business of the firm; investing cash flows, for example, sale of property, plant and equipment, stocks and investments in other firms; financial cash flows. Here is an example statement of cash flows from the Woolworths Group Annual Report 2019.

Before we delve deeper into the week, let us start with recapping the core financial statements that you need to know about. Watch the video to learn more about financial statements.

This article is from the free online

Financial Analysis for Business Decisions: Introduction to Data Analysis Tools and Capital Projects

Created by
FutureLearn - Learning For Life

Our purpose is to transform access to education.

We offer a diverse selection of courses from leading universities and cultural institutions from around the world. These are delivered one step at a time, and are accessible on mobile, tablet and desktop, so you can fit learning around your life.

We believe learning should be an enjoyable, social experience, so our courses offer the opportunity to discuss what you’re learning with others as you go, helping you make fresh discoveries and form new ideas.
You can unlock new opportunities with unlimited access to hundreds of online short courses for a year by subscribing to our Unlimited package. Build your knowledge with top universities and organisations.

Learn more about how FutureLearn is transforming access to education