You will learn about key statements for your business:
-A Profit and Loss Statement, also known as an Income Statement, measures net income or loss over a defined time.
-A Balance Sheet shows your company’s assets, liabilities and owners’ equity to indicate financial health at a specific point in time.
-A Cash Flow Statement shows the timing of all cash going in and out of the business over a particular period. The cash flow planning tool you reviewed helped you see, in detail, the cash inflows and outflows. Loan principal payment, capital purchases, and owner’s withdrawal are all important factors to include in your cash plan.
-Financial ratios help you measure different aspects of your business’s productivity—using assets, generating profits, moving inventory, and so on. Calculating financial ratios requires working with the numbers in your company’s financial statements. For example, current ratio measures your company's ability to pay both short- and long-term debts, and is calculated using numbers from your Balance Sheet and the formula Current Assets / Current Liabilities.