The purpose of this article is to explain the contents of Profit or Loss Statement which can then be used for ratio analysis to analyse the company’s financial performance. As ratio analysis use many figures from Profit or Loss statement, without understanding this statement properly it would not be possible to carry out an accurate and comprehensive financial analysis of the company.
Statement of Financial Position is a primary financial statement which gives the financial position of business on the date when this statement is prepared. The previous name for this statement was “Balance Sheet” and most of the businesses still use this title for this statement. Just like Statement of Profit or Loss
While Statement of Cash Flows explains Cash and Cash Equivalent figure from Statement of Financial Position, this statement gives more details and explains the figures given in the equity section of Statement of Financial Position. Rows titles given in the equity section of Statement of Financial Position are the titles for each column..
