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The Income Statement
It is a financial summary of the operating results of the firm. In other words, it represents the amount of revenues generated over a period of time, the cost and expenses incurred over the same period, and the company’s profits. The income statement covers activities that have occurred for a given operating period, usually a fiscal or calendar year.
The Statement of Cash Flow
It is a summary of a company’s cash flow and other events that cause changes in the cash position. Its usefulness is in the fact that it shows how a company is doing in generating cash i.e. the amount of money a company actually takes in as a result of doing business.
Financial Ratios
In financial analysis, two yardsticks are available: ratio or index. They help to relate two pieces of financial data to each other. The analysis and interpretation of various ratios should give experienced analysts a good understanding of the financial condition and performance of a company over the use of financial resources.
Ratio analysis is therefore the study of the relationship between various financial statements of account. Each ratio analysis carried out relates one item in the books to another or balance sheet to income statement. Financial ratios can therefore be grouped into five categories: (1) liquidity ratios, (2) activity ratios, (3) leverage ratios, (4) profitability ratios and (5) common stock, or market measures.
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Adeshola
Adeshola Komolafe
Founder/Researcher
SAVE OUR FUTURE
Abuja
Nigeria
www.desholakomolafe.com
Email: adesholakomolafe@yahoo.com
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