FINANCIAL STATEMENTS
Paul Levine
Commercial Realtor and Real Estate Advisor | Retired CPA with over 50 years of income tax experience that no other Commercial Realtor has, Income Tax Consultant and unmatched Creatively!
Part IV of IV... THE END...
The Statement of Income is the results of the income, cost of sales, and expenses of the business over the last accounting period which is usually the last calendar year. So, the numbers are all current as far as the value goes unless we have another crash of the stock market like we had in 1929 in the middle of the year.
There may also be a Statement of Equity which summarizes the changes to the capital stock and retained earnings during the year and the last statement, the Statement of Cash Flows is a conglomeration of taking numbers from all the other statements and explaining the change to cash. BUT the most important part of the financial statement package in my opinion is The Notes to the Financial Statements. The notes explain the basis of accounting used, the terms of the long-term debt, and other information about the assets and liabilities which give the reader information about the numbers on the other financial statements.
So, this is accounting!!! GAAP gives you a set of numbers that are meaningless except that you can compare them from one year to the next and see how the entity is doing. I will bet that no one ever explained a financial statement package to you in this way.
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As I said many times, I have a different way of looking at things and I want you to know what you are looking at and the significance of the numbers and information when you analyze an investment that is being presented to you. Rely on the Statement of Income because that statement gives you numbers that are consistent, and the value of each item is consistent throughout the statement.
Now, if I wanted to, I could talk about projections that are presented to you in a prospectus for a potential investment, but those numbers are all guesses made by management based on assumptions that they believe to be true. They can be wrong!!!
My name is Paul Levine, and I am a Commercial Realtor, a Real Estate Advisor, an Investment Advisor, and an Income Tax Consultant!!! You can call me at (818) 298 – 4000 after 10 AM Pacific Time Monday through Friday and, yes, even on the weekends. Or you can send an email to me at [email protected] and I will always try and answer you in a timely manner.