Same things, different names

If you want to be a savvy stock investor, you’ll need to learn your way around financial statements. The three main ones are the balance sheet, the income statement and the statement of cash flows. One of the first things to know about them is that many line items in them go by different names in different companies’ reports.

In fact, even the financial statements’ names can vary — for example, the income statement can also be called an “earnings statement,” a “consolidated statement of income,” a “statement of operations” or a “profit and loss statement.” The balance sheet might be presented as a “statement of financial condition” or perhaps a “consolidated balance sheet.”

Below are some of the main terms you’ll run across in financial statements that have alternate names. One company may use one term in its statements, while another company uses another. Being familiar with alternative names can reduce confusion as you learn your way around these statements.

• Accounts payable = payables

• Accounts receivable = trade receivables = receivables

• Additional paid-in capital = capital in excess of stated value = capital surplus = paid-in capital in excess of par

• Earnings = net income = net profit = net earnings

• Earnings before income taxes = income (loss) before income taxes = earnings before provision for income taxes

• Earnings per share = EPS = net income per share = net income per common share

• Inventories = merchandise inventories • Revenue = sales = net sales

• Shareholder equity = shareholders’ investment = stockholders’ equity

• Short-term debt = debt payable within one year = current portion of long-term debt

Financial statements can be intimidating, but you can learn how to read them, and that can lead to better investing decisions and results. Check out books such as “Accounting Made Simple” by Mike Piper (Simple Subjects, $15) for more information.