5/8/23, 3:31 PM
A Guide to Reading Financial Statements for Small Business Owners | Brooklynn Chandler Willy | Entrepreneurship
a A Guide to Reading Financial Statements for Small Business Owners by Brooklynn Chandler Willy | May 8, 2023 | Brooklynn Chandler Willy, Entrepreneurship
Although you may be familiar with the various financial statements that are presented to a business owner, you may need help to interpret them correctly. This guide will provide you with the necessary information to make informed decisions. Financial statements are composed of various components such as the income statement, cash flow statement, and balance sheet.
The Income Statement An income statement shows a company’s income, expenses, and net income for a specific period. It’s important to note that the amount of money the business makes and spends during a specific period is shown. When reading an income statement, look at the revenue or sales section. This will show how much your business makes from selling products or services. Next, look at the cost of goods sold section, which shows the expenses directly related to producing the products or services sold. The difference of revenue and cost of goods sold is the gross profit.
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