Introduction to Financial Statements

Although the words financial statements and accounting send cold shivers down many people’s backs, this is the language of business, a language investors need to know before buying stocks. The beauty is you don’t need to be a CPA to understand the basics of the three most fundamental and important financial statements: the income statement, the balance sheet, and the statement of cash flows. All three of these statements are found in a firm’s annual report, 10-K, and 10-Q filings.

The financial statements are windows into a company’s performance and health. We’ll provide a very basic overview of each financial statement in this lesson.