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The Beginner’s Guide to Understanding The 3 Financial Statements

The Beginner’s Guide to Understanding The 3 Financial Statements

All listed companies on SGX are mandated to report their financial performance periodically. Every quarter, companies must report their financial performance using a structured set of 3 financial statements. The financial statements adhere to international accounting standards and the local Singapore reporting standards have very similar formats making it easy for investors to review.

40cb66be628343902b3f21fbe1989c5c_xlThis post first appeared on ProButterfly.com on 12-Dec-2017 and also on InvestingNote. It was written by our veteran community member, Tam Ging Wien, author of REITs to Riches: Everything You Need to Know About Investing Profitably in REITs.

We decided contribute to the InvestingNote community with an educational piece to demystify the 3 financial statements.

When read with begin with A…B…C…, when we sing with begin with Do… Re…Me…

That at least how the song lyrics go.

But when we want to understand and assess the financials of a stock, we need to begin with the 3 financial statements, namely:

  • Balance Sheet (or Statement of Financial Position)
  • Income Statement (or Profit/Loss Statement)
  • Cash Flow Statement

Financial statements are reported based on time periods. By reviewing the 3 financial statements, investors are able to deduce the financial position of the business and how its financials have changed over time.

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