Through the years the business world has use accounting and financial statements as a mean for communicating the numbers. Basically as a business person you need to know how to read financial statements in order to understand your business.

There are four basic financial statements that are normally prepared by profit-making organizations to be used by financial corporations, banks, stockholders and other external decision makers.

The first statement that we will discuss is the income statement. The Income statement is a financial report that shows the profits and costs and the resulting net revenue or net loss of a company for an explicit period of time. It basically displays how much cash a company earned and disbursed over a specific dates. The income statement is fundamentally a report to demonstrate the accomplishments or failure of the company's operations for a period of time. Income statements as well report earnings per share (or “EPS”). This calculation expresses how much money shareholders would receive if the company has to dispense all of the net incomes for the period.

The Balance sheet is another financial statement that will be discussed. The balanced sheet reports the assets and claims to those assets at a specific point in time. It shows what a company possesses and what it is in debt at a fixed point in time. Claims to assets are subdivided into two classes: claims of creditors also known as liabilities and claims of owners also known as stockholders' equity.
The assets are possessions that a company owns that have any value. This usually means that those possessions could be sold, traded or used by the company to make products or provide services that can be sold. Assets include physical property, such as buildings, vehicles, machinery, inventory and cash. It also includes things that exits but can’t be touched such as