The 411 on financial statements

Companies’ financial statements can be confusing enough, and it doesn’t help that many items go by different names on different companies’ reports. For example, you might know to look for “revenue” on an income statement, but the one you’re looking at calls revenue “sales.” Even income statements themselves go by different names. Argh!

The list below, which we offer from time to time, can make your life easier. It’s not comprehensive, but it covers many of the variations you’ll likely run across.

n Accounts Payable = Payables

n Accounts Receivable = Trade Receivables = Receivables

n Additional Paid- in Capital = Capital in Excess of Stated Value = Capital Surplus = Paid- in Capital

n Balance Sheet = Statement of Financial Condition = Consolidated Balance Sheets

n Cost of Goods Sold = Costs of Sales = Cost of Revenue = Cost of Products Sold = Costs, Materials and Production

n Earnings = Net Income = Net Profit = Net Earnings

n Income Statement = Earnings Statement = Statement of Operations = Profit & Loss Statement = Consolidated Statement of Income

n Inventories = Merchandise Inventories

n Earnings Before Income Taxes = Income ( loss) Before Income Taxes = Earnings Before Provision for Income Taxes

n Earnings per Share = Net Income per Share = Net Income per Common Share

n Revenues = Sales = Net Sales

n Shareholder Equity = Shareholders’ Investment = Stockholders’ Equity

n Short- Term Debt = Debt Payable Within One Year = Current Portion of Long- Term Debt = Notes Payable

Take some time to learn to read financial statements ( balance sheets, income statements, statements of cash flow). It will take some perseverance, but it’s well worth it. As you flip through a company’s annual report, important insights will pop out at you.

Learn more with “Financial Statements” by Thomas R. Ittelson ( Career Press, $ 18).