Introduction To Financial Statements (Part 2)

In Introduction To Financial Statements (Part 1), we talked about why it’s important to learn to read financial statements and discussed in detail the balance sheet.

Now, let’s look at the income and cash flow statements.

Income Statements

An income or profit loss statement is a report that shows how much you’ve earned over a specific time period. An income statement shows the costs and expenses associated with earning that money. The literal “bottom line” of the statement usually shows the company’s net earnings or losses.

Income statements also report earnings per share (or “EPS”) which calculates how much money shareholders would receive if you distributed all of the net earnings for the period. Read more