CPD – Understanding Financial Statements

Managing business finances can be overwhelming; however, learning to build and understand financial statements can make the process easier. It helps you gain control over your financial situation, track progress, and make informed decisions. By understanding financial statements, you can identify areas for improvement. Then, you can plan for the future and ensure your business stays on track.

In this course CPD – Understanding Financial Statements, you will deep dive into financial statements and how each type is important for a business. Learn how to build each statement and understand how to use it in growing a business.

What is a financial statement?

A financial statement is a general term that refers to documentation of a business’s financial activity. This means that these statements are records of revenues, expenses, profits, and losses over a period of time, as well as assets, liabilities, and equity. These statements give a clear overview of the financial health of a business. With it, owners, investors, and managers can make informed decisions.

A company’s financial documents are usually prepared by an accounting professional, such as an accountant or a bookkeeper. However, in small businesses, the owner or an internal team may handle them instead.

Types of Financial Statements

There are four main types of financial statements: the income statement, the balance sheet, the cash flow statement, and the statement of owners' equity. In understanding financial statements like these, you’ll find each one has a different purpose. But, they are all connected and help show the financial health of a business.

All four are important for keeping good financial records and making smart decisions. Here are the four types of statements in detail:

Balance Sheet

This financial statement shows the assets, liability, and equity. To explain further, an asset is anything a company owns that is used to bring in income and support the business. Then, contrary to an asset, a liability is what a business owes. These are debts and obligations of a company to other people or company. Lastly, an equation is simply asset minus liability.

Income Statement

From its name, this document shows if the company is profiting. To get better at understanding financial statements such as these, it’s important to take note of its three main parts. The revenue, expenses, and net income. The revenue is the total amount of money earned while expenses are the total money spent. Now to know the net income, you will subtract expenses from revenue. So if the difference is positive, the company makes a profit but if it’s negative the company experiences a loss.

Cash Flow Statement

This statement tracks how the cash went in and out of the business. To organise the cash flow, this statement is divided into 3 types which are; operating, financing, and investing. Starting with operating activities, this refer to cash flows from the core business operations, including cash from sales and payments for expenses like salaries and supplies. Now going to investing activities, this tracks cash spent on or earned from buying and selling long-term assets such as equipment or property. Lastly, financing activities show cash flows tracking borrowing money, repaying loans, issuing stock, or paying dividends. All in all, these sections provide a clear picture of how the business generates and uses cash.

Statement of Owners' Equity

The Statement of Owners' Equity shows how the owner's share in the business changes over time. It includes things like the starting equity, any extra money the owner puts into the business, the profits or losses the business makes, and any money taken out by the owner. This statement helps to see how the value of the business has grown or changed based on the owner's actions and the company's performance.

Importance of understanding financial statements

Financial statements are important for business owners because these documents show the business's financial health. These documents organise everything related to finances such as earnings, expenses, and a lot more. As a result of the data tracked, businesses can decide what steps to take next to ensure their growth.

Aside from businesses, these documents are also important for banks, investors, and other companies. The reason is, that through these statements, they can decide whether to lend or invest in the business. Now, a lot of businesses are growing and need a person to do their statements. Through our course CPD – Understanding Financial Statements, you will gain the knowledge and skills to be qualified to do it.

Course Description

The course CPD – Understanding Financial Statements will help you learn how to understand financial statements. This course covers how to understand and build the 4 different types of it. By the end of it, you will be able to read these statements, understand the company’s financial health, and make better business decisions.

This programme is suitable for business owners and anyone looking to start a career in accounting, finance, bookkeeping, or business management. After this, participants will have the confidence and be ready to build, manage, and read the statements.

Course Programme

In this course, you’ll start by exploring the basics of financial statements. Gradually, you'll dive deeper into each one, learning how to create and interpret them. By the end of the course, you'll have practical skills to analyse a company’s financial health. You'll then be able to make data-driven decisions with confidence.

• Introduction to Financial Statements:
  Learn the basics of financial statements and why they are crucial for businesses.
• Income Statement:
  Understand how to read and create an income statement. Learn how to track revenue, and expenses, and determine whether a company is making a profit or loss.
• Balance Sheet:
  Gain the skills to analyse a balance sheet. You’ll learn to break down assets, liabilities, and equity to understand a company’s financial position at a given time.
• Cash Flow Statement:
  Learn how to track cash flow effectively. Understand the movement of cash in and out of a business through operating, investing, and financing activities, and why understanding financial statements like these is crucial to business success.
• Statement of Owners' Equity:
  Learn how to calculate and interpret changes in the owner’s equity. This section covers how profits, losses, and owner contributions or withdrawals impact a business’s value.
• Practical Applications:
  Apply your knowledge with real-life examples. You'll work on practical exercises that help you build and analyse financial statements, preparing you to handle business challenges confidently.

Entry Requirements

This CPD – Understanding Financial Statements course has no requirements. No prerequisite knowledge and no materials are needed. We welcome everyone to this course. Whether you are a student, a business owner, advancing your career, or just interested in improving your financial knowledge.

A Statement of Journey

Understanding a business’s financial statement is like reading its journey. You can see the highs, the lows, and the strategies it uses to recover and grow. Similarly, just like in every story, you learn its strengths, weaknesses, and the lessons it picks up along the way. All in all, It shows how the business changes, improves, and plans for the future.

The College of Contract Management is offering the course CPD – Understanding Financial Statements to help you understand, manage, and build your statement. Enrol today and start writing the first page of your financial journey.

We're in the final stages of preparing the CPD – Understanding Financial Statements. All course materials and necessary tools will be provided during the lecture to enrich your learning journey. If you have any queries, feel free to reach out to our support team through email or live chat.