📘 Capital Market Chronicles – Episode 109: Financial Statements (Part I)
Because ‘Trust Me, Bro’ Is Not a Valid Investment Strategy”
Welcome, dear market mortals, to the Twilight Zone of Corporate Accounting, where financial statements whisper truths, hide red flags, and sometimes wink at you with footnotes 👀.
In this chapter, we begin decoding these mystical scrolls so you don’t mistake “profit” for “pretty infographic with a rising arrow.”
Let’s dive into the holy trinity of accounting—Balance Sheet, Income Statement, and Cash Flow Statement—a.k.a. the “Netflix, Naps, and Noodles” of finance 🍜💤📉 (because once you start reading them, all you’ll want is comfort food and a nap).
🧾 1. Balance Sheet:
Your Company’s Financial Selfie — But With Zero Filters
Think of this as the company’s financial group photo:
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Assets: Smiling proudly in the front row.
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Liabilities: Hiding a loan behind their back.
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Equity: Standing awkwardly in the middle saying, “Hey, I own this place… sort of.”
🧰 Assets:
The cool stuff your company owns (or at least pretends to own during investor presentations 📊😅)
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Current Assets (the party snacks): Cash, inventory, accounts receivable—basically the stuff that turns into cash faster than you can say “liquidity crunch.” 🥳💸
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Non-Current Assets (the antique furniture): Buildings, factories, long-term investments, and other dinosaurs that don’t move much but cost a lot. 🏢🦕
💣 Liabilities:
The “uh-oh” section. All the money the company owes.
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Current Liabilities (due very soon): Bills, salaries, short-term loans—like when your landlord wants rent now and your wallet has moths 🧾🪰
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Non-Current Liabilities: Long-term stuff—like that 10-year loan your CFO pretends doesn’t exist during media interviews 😇📉
🧮 Equity:
The leftovers.
Assets – Liabilities = what the shareholders theoretically own. (We say theoretically because… well… audits 🤷♂️)
Includes:
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Share Capital: Investors love money 💌
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Retained Earnings: Company profits not spent on office beanbags or pizza Fridays 🍕✨
📊 2. Income Statement
The Company’s Gossip Column: Who Earned What, and Who Spent It All
This is where the company spills the chai ☕.
💰 Revenues:
Money made from selling actual stuff—not promises, NFTs, or dreams of becoming “the Uber of umbrellas.”
🧾 Expenses:
Where all the revenue goes to die.
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COGS (Cost of Goods Sold): Making the product. Includes materials, labour, and late-night vending machine raids by staff.
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Operating Expenses: Rent, salaries, electricity—aka the “necessary evils” of running a business 💼⚡
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Non-Operating Expenses: Interest payments, taxes, and those mysterious “other charges” no one understands 😬💸
🔍 Net Income:
The final number after all blood, sweat, and cheques.
If positive: 🥳 Profit!
If negative: 😢 Loss!
If barely above zero: 🤐 Let’s call it “strategic reinvestment”
💸 3. Cash Flow Statement
The Company’s Real-Life Bank Statement—Minus the Swag
Because a company can be “profitable” on paper and still be broke in real life. This statement answers: “Dost, paisa kahan hai?”
🏭 Cash from Operating Activities:
Is the business making cash from its actual business? Or are they just good at storytelling and burning investor funds?
🧱 Cash from Investing Activities:
Where’s the company putting its money?
Buying machines? New factories? That one company in Spain, “for strategic synergies”? 😏🌍
🧾 Cash from Financing Activities:
Borrowing, repaying, issuing shares—this section is the ultimate trust test: Are they using investor money responsibly or booking holidays in the name of “offsite workshops”? ✈️🍹
🧠 Summary:
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Balance Sheet: What we have 🏢, what we owe 💳, and what’s left 💼
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Income Statement: How much we earned and how much we burned 🔥
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Cash Flow Statement: Are we broke yet? 🤔💸
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