Personal Money Management 101 Blog

Key Accounting Ratios

A number of key accounting ratios can be calculated from the financial statements of a business. These ratios provide an objective summary of the financial health and investment quality of a business.

Remember though that accounting methods vary from one company to another, and also that typical ratio values may vary widely from one sector to another. Read the rest of this entry »

The last (but certainly not least important) financial statement is the cash flow statement. This statement shows the movements of cash into or out of the business. No matter how healthy the profit & loss account and balance sheet may appear, without sufficient cash a business will fail. Read the rest of this entry »

The Balance Sheet is a snapshot of a business’s financial position (what it owes and owns) at a particular moment in time. Read the rest of this entry »

The Profit and Loss Account summarizes a business’s performance over a period (usually a year). Read the rest of this entry »

This section introduces the key concepts of accounting for investors. Its intention is to better enable investors to understand and interpret the financial statements of businesses they might invest in.

Accounts provide a (hopefully) objective analysis of the state and performance of a business. Accounts of listed companies must be prepared according to both the law and Generally Accepted Accounting Principles (GAAP). Read the rest of this entry »