4.1 -Overview of the financial statements
In the previous video, we analyzed a company’s annual report. The other important statement that companies publish is their Profit and Loss statement (P&L). A P&L statement has the revenues, expenses, taxes, and the profits or losses of a company for a given period. Analyzing a P&L statement will provide you with a sense of the company’s financial position.
In this video, we look at the components of a P&L statement and analyze them.
In the following video, we will learn about the Balance Sheet.
We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- The financial statement provides information and conveys the financial position of the company.
- A complete set of financial statements include the Profit & Loss Account, Balance Sheet and Cash Flow Statement.
- A fundamental Analyst is a financial statement user, and he needs to know what the maker of the financial statements states.
- The profit and loss statement gives the company’s profitability for the year under consideration.
- The P&L statement is an estimate, as the company can revise the numbers later. Also, by default, companies publish data for the current year and the previous year, side by side.
- The revenue side of the P&L is also called the top line of the company.
- Revenue from operations is the primary source of revenue for the company.
- Other operating income includes revenue incidental to the business.
- The other income includes revenue from non-operating sources.
- The revenue from operations (net of duty), other operating income, and other incomes give the ‘Net Revenue from Operations.