How Do you - Check Fin. Statements in Annual Reports

There are 3 main financial statements in the report:

• The Profit and Loss Account.
• The Balance Sheet.
• The Cash Flows Statements.

1. The Profit and Loss Account
The Profit and Loss account shows how much revenue was raised during the year, both from sales and other income sources and also shows the expenditure incurred to earn that income or sales. Any revenue or expenses that are abnormal (i.e. are outside of those that normally occur each year) are also explained fully.

It will also show the operating profit of the business, including the tax allocated for payment from those profits. The balance will be the retained profits at the start of the financial year, and when that is added to the retained profits of the previous year, arrives at the retained profits at the end of the current financial year.

If a dividend has been declared, then the funds required to meet that dividend are usually deducted from the amounts set to be available for appropriation. So the Profit and Loss account basically shows a profit or a loss for the company for the last year and shows how that profit or los...