Financial Statements Terms
Why Financial Statements matter in interviews
Financial Statements are the skeleton of a business and you will be tested extensively on them. Primarily, your understanding of how dollars move across the three statements and how to deduce the financial attractiveness of a business by using the three statements.
C
- Cash Flow StatementFinancial StatementsA cash flow statement is a financial report that tracks a company's cash inflows and outflows over a specific period, categorizing them into operating, investing, and financing activities.
- Cash Flow from FinancingFinancial StatementsCash Flow from Financing refers to the section of a company’s Cash Flow Statement that shows the cash inflows and outflows related to activities that affect the company’s capital structure.
- Cash Flow from InvestingFinancial StatementsCash Flow from Investing refers to the section the Cash Flow Statement that shows the cash spent on and received from investments in long-term assets.
- Cash Flow from OperationsFinancial StatementsCash Flow from Operations is a section on the Cash Flow Statement referring to cash generated or used by the company’s core business operations during a specific period.
- Cost of Goods Sold (COGS)Financial StatementsThe Cost of Goods sold refers to the total direct costs a company incurs to produce the goods it sells, including the cost of raw materials and labor directly used to create the product.
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G
- G&A (General & Administrative)Financial StatementsG&A (General & Administrative) is a section within the Operating Expenses section of a P&L, along with R&D (Research & Development) and S&M (Sales & Marketing).
- Gross ProfitFinancial StatementsGross Profit is the amount of dollars remaining after Revenue has been reduced by Cost of Goods Sold (COGS).
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- Operating ExpensesFinancial StatementsOperating Expenses are the bucket that contains all General & Administrative (G&A), Sales & Marketing (S&M) and Research & Development (R&D) expenses.
- Operating IncomeFinancial StatementsOperating profit is similar to EBITDA as it’s used a profitability metric. But, it includes depreciation and amortization.
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R
- R&D (Research & Development)Financial StatementsR&D is a section in Operating Expenses, along with G&A (General & Administrative) and S&M (Sales & Marketing).
- RevenueFinancial StatementsThe amount of Sales that a business generated over a time period. It is at the top of the Income Statement. If you sell 10 flowers for $1, you generated $10 in Revenue.