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Important Financial Statements

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Unit Video

Unit Summary

The 3 most Important Financial Statements are:
  • Balance Sheet
  • Profit or Loss Statement – P&L
  • Cash Flow statement

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Transcript

Hi, in this video you will learn about the most important financial statements in any organization.
Financial statements help to manage your business by showing you where the money came from, where it went and where is it now, allowing you in turn to ensure that you have a healthy business.
The three most Important Financial Statements are:
  • The Balance Sheet which highlights the assets – what you own, liabilities – what you owe, and capital – what is owed to owners. Assets = liabilities + capital.
  • The Profit or Loss Statement – P&L for short – also called Income statement includes how much sales or revenue you made over the year less the expenses.
  • The Cash Flow statement includes in the Inflows and outflows of cash in the company. This document is updated on a monthly basis since you always need to ensure you have enough cash to pay for your expenses.
As the saying says – cash is king!

Case Study

A company decided to overhaul its approach to finance talent management as part of a larger transformation of its finance function from a tactical numbers shop to a high-performing business partner to the other business units.
The Challenge Company leaders wanted the finance function to deliver strategic analysis and business insights. But finance associates were spending about 75 percent of their time on transactional activities such as paying the bills, which left little time for higher-level activities such as risk analysis and statistical modeling. Moreover, the chief financial officer (CFO) wasn’t even sure that the finance organization was equipped with the talent to offer the insights leaders were requesting.
The finance function undertook a comprehensive effort to understand what skills it needed to play a more strategic role, identify which of those skills it lacked, and obtain and deploy those skills while effectively managing organizational change. Significant accomplishments included:
  • Defining talent needs
  • Evaluating employee skills
  • Aligning performance management
  • Developing shared services roles and responsibilities
  • Accelerating recruitment
  • Validating employee fit
  • Creating a career center
  • Delivering training and development
  • Improving succession planning
  • Managing change

Quotes

“Beware of little expenses. A small leak will sink a great ship.” Benjamin Franklin