Understanding Financial Statements, the Basics

Every business, whether it is a multi-billion dollar automotive plant or a home based eBay business, communicates with investors, banks, employees, customers, suppliers and government using the same language. Every business can be broken down into the same basic components and can be analyzed using the same basic formulas. This discussion explores the financial language of business at its highest level, the financial statements. In doing so it will give those who need to understand how businesses work, without becoming financial experts, a starting point for understanding the basic concepts and components of financial statements. This is neither an accounting text book nor a technical manual on how to prepare statements, it is a guide intended to increase your base understanding of financial concepts.