08-01-2015, 08:02 AM
I was reading on Seeking Alpha the other day and found a new quote to add to my portfolio business plan. I wasn't particularly enlightened by it because it was intuitive to me but it did state the concepts in a concise way and a twist on how I worded it when I taught small business accounting/bookkeeping. Maybe it will help the newbies here that haven't read a bunch of financial statements to understand what they are looking at:
- "Financial statements are intended to tell us what a company has (the balance sheet) and what the firm did with what it has (the income statement). They also disclose what management has done with its cash (the statement of cash flows). We need to know these things because ultimately any investment's value is determined by how much cash it can generate for its investors, and how predictable (or unpredictable) this cash stream is."; Douglas Tengdin, CFA on Seeking Alpha, July 2015.