Warren Buffett calls accounting the language
of business and he noted that it's a vitally important skill for every investor and business
person to learn yet the sad truth is that 95% of business people don't know how to read
financial statements that's like being
a professional musician but not knowing how to
read music in this video I'll explain what the three financial statements are and show you line
by line how they connect with each other if you watch this video to the end you'll literally
know more about accounting than 95% of people
in business hi my name is Brian Feroldi I'm a
financial educator who's been analyzing businesses for more than 20 years now there are three major
financial statements they're called the income statement balance sheet and cash flow statement
each statement is designed to answer a specific
商業人士。嗨，我是 Brian Feroldi，我是一名財務教育者，分析企業已超過 20 年。現在有三大主要的財務報表，分別是損益表、資產負債表和現金流量表。每張報表都是為了回答關於公司財務狀況的特定
00:41
question about a company's financial position
to give readers a more complete view of its Financial Health so the income statement answers
the question are you profitable it measures a company's revenue and expenses over a period of
time to answer that question the top number of the
income statement is a company's sales or Revenue
During the period from there we subtract a variety of expenses that the company takes on after we've
subtracted those expenses we are left with either
銷售額或營收。從那裡，我們減去公司承擔的各種費用。在扣除這些費用後，我們會得到
01:05
a profit or loss on the bottom line from there we
divide that profit or loss by the total number of shares outstanding which gives us a profit or
loss on a per share basis the second financial
底部的淨利或淨損。接著，我們將該淨利或淨損除以流通在外股數，就能得到每股的盈餘或虧損。第二張財務
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statement is called the balance sheet which
answers the question what's your net worth the balance sheet lists all of a company's assets on
one side which is everything it owns on the other
side it lists all the company's liabilities which
is everything that owes to others and all of the equity in the business which called shareholders
Equity the balance sheet is called the balance sheet because of the master accounting equation
assets equals liabilities plus shareholders Equity
this equation always perfectly balances hence
the name of the sheet the third major financial statement is called the cash flow statement
and it answers the question are you producing cash the cash flow statement is also measuring a
company's cash inflows and outflows over a period
of time similar to the income statement but the
cash FL statement only cares about the movement of cash in and out of the business and those cash
movements are tracked in three General categories the first category is called operating activities
this is all cash inflows and outflows related to
operating the business the second is called
investing activities these are cash inflows and outflows related to making investments in
the business and the third is called financing activities this is cash inflows and outflows due
to financing decisions related to the business
營運業務相關的現金流入和流出。第二類稱為投資活動，這些是與對 business 進行投資相關的現金流入和流出。第三類稱為融資活動，這是與 business 相關的融資決策所產生的現金流入和流出。
02:25
now each of these financial statements stands
on its own to answer that specific question about a company's financials however all three of
these statements talk to and are connected to each
現在，每張財務報表各自獨立回答關於公司財務的特定問題。然而，這三張報表彼此對話且相互連結，
02:35
other and it's by studying the connections between
the financial statements that we can understand a company's financial position on a far deeper
level now that we understand the basics let's take a look at the financial statements of a fake
company called best coffee company to see how
these three financial statements connect with each
other here we have best coffee company's income statement on the Le hand side cash flow statement
on the right hand side and balance bance sheet in
the middle notice that the income statement and
cash flow statement are measured over a period of time January 1st through December 31st while
the balance sheet is a point intime snapshot
taken on the last day of the period December
31st 2023 so to understand how the financial statements connect with each other let's start by
taking a look at how the income statement connects to the balance sheet to do so we're going to go
line by line down the income statement and show
you how each category affects the numbers on the
balance sheet the first time to look at would be Revenue which is the total sales generated During
the period now revenue or sales can be accounted
for or paid for in two different ways the first
way would be if the customer makes a cash payment for those sales for example buying a cup of coffee
for us and then paying in cash this would directly
例如購買一杯咖啡，然後用現金支付。這會直接
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impact the balance sheet because it would make the
cash balance that we have go up however a customer could also pay for that same coffee using credit
in which case the business would not receive the
cash immediately we would record that transaction
on the balance sheet under a category called accounts receivable and that transaction would
cause the company's accounts receivable balance to increase the next line item on the income
statement is called cost of goods sold this is all
of the cost directly related to producing the cup
of coffee that was sold and would include things like the beans the water and the paper products
used to give the coffee to the customer now best coffee company could pay for those supplies in
a few ways first it could make a cash payment
to the supplier for those supplies which would
decrease the company's cash balance or it could use inventory that it already has on hand which
would decrease the company's inventory balance or it could buy those supplies using credit in which
case it would increase the company's accounts
payable bound now the next number in the income
statement is called gross profit which is simply Revenue Minus cost of goods sold this figure
has no impact on the balance sheet so we'll move on to the next number the next category here is
operating expenses which is a catch-all category
for all overhead expenses that a business takes
on now there are multiple ways that a business could pay for its operating expenses as well if
it paid for those operating expenses using cash that would immediately decrease the company's cash
balance it could also pay those operating expenses
on credit and it would do so by increasing the
payables that it owed to others now those others could be employees of the company or suppliers
that provide some of the overhead now one final
透過增加對他人（例如提供部分開銷的員工或供應商）的應付帳款來完成。最後一個
05:20
category of operating expenses that could be paid
is something called a noncash expense these are real expenses that the business takes on but they
don't result in an immediate I cash outflow to the
可以支付的營業費用類別是非現金費用。這些是企業實際承擔的費用，但並不會導致企業立即的現金流出。
05:31
business an example of a non-cash expense would
be depreciation or the gradual writing down of the company's fixed assets this would directly
impact the balance sheet because we would mark
down or depreciate the value of the fixed assets
on the balance sheet another non-cast charge would be amortization which is the writing down of
the value of intangible assets just like with
標記或折減固定資產的價值。另一項非現金費用是攤銷，即無形資產的價值減記。就像折舊一樣，
05:51
depreciation taking an operating expense
charge of amortization would result in the gradual writing down of intangible assets on the
the balance sheet the final non-cash category is
列出攤銷的營業費用會導致資產負債表上的無形資產逐漸減記。最後一個非現金類別是
06:02
stock-based compensation this is when an employee
is compensated with stock instead of cash now when stock-based compensation is paid to an employee
it's marked as an operating expense on the income
股票薪酬。這是當員工以股票而非現金獲得報酬時。當支付股票薪酬給員工時，
06:13
statement but it also impacts the balance sheet
because it increases the additional paid in capital of a business and simultaneously decreases
the amount of retained earnings that the business has that brings us to another profit metric called
operating income which is simply gross profit
minus those operating expenses the next line item
is called nonoperating expenses or income and this could impact the balance sheet in several
ways first any interest generating assets that
the company has such as cash marketable Securities
and other long-term assets would generate interest income for the business this would be recorded
directly on the income statement next any interest
bearing liabilities that the companies has such
as short or long-term debt would increase the company's interest expense that interest expense
would be recorded on the income statement finally
有息負債，例如短期或長期債務，會增加公司的利息費用。該利息費用會記錄在損益表上。最後，
07:02
we could also generate nonoperating income if we
sold an asset now those asset sales could include selling fixed assets intangible assets or even
selling off a part of the business whenever we
would do an asset sale we would increase our cash
balance but we would simultaneously decrease our long-term assets the next number in the income
statement is simply pre-tax income which is
operating income plus or minus any nonoperating
expenses or income the next line item here would be taxes now there are multiple ways that a
company can pay its tax bill the first way would be to pay directly with cash on hand which would
lower its cash balance the second way would be
to delay the payment of those taxes which would
increase our accounts payable total that brings us to the bottom line on the income statement
which is called net income which is revenue minus all of the company's very expenses
on the income statement now our net income
降低其現金餘額。第二種方式是延遲支付這些稅款，這會增加我們的應付帳款總額。這就來到了損益表的底線，
07:53
total gets added to a company's retained earnings
balance on the balance sheet retained earnings is the cumulative amount of profit that a company
has generated over its lifetime as a business so
we directly add the company's net income from that
period to the company's retained earning total the next number on the income statement is the total
number of shares outstanding and then finally we have earnings per share which is simply net income
divided by the total amount of shares that we have
outstanding so there you go that is how the income
statement directly impacts the balance sheet now let's move on to showing how the income statement
directly impacts the cash flow statement to show
this we're going to go line by line through the
company's cash flow statement and show how each category could be impacted by the income statement
now the first and most important way that these two financial statements are connected is through
net income the bottom line on the income statement
net income is the top line on the cash flow
statement so the cash flow statement starts with how much profit we generated during that period
from there we need to make various adjustments
based on whether cash came into the business
or out of the business depending on that net income the first thing we need to account for is
any non-cash charges that were recorded on the income statement remember on the income statement
we recorded some non-cash charge expenses but
these did not result in an immediate outflow of
cash so we have to account for that on the cash flow statement now the two categories that could
include non-cash charges are the cost of goods
sold on the income statement and the operating
expenses on the income statement those non-cash charges could include things like the depreciation
of fixed assets the amortization of intangible assets and stock-based compensation these non-cash
charges would result in a positive impact to the
company's cash flow statement since they did not
result in a cash payment the next item here is to track a company's changes in working capital now
working capital just means things like accounts
receivable accounts payable and inventory these
categories do not impact the income statement they impact the balance sheet so we'll talk about those
in the next section the next number here is cash
flow from operating activities which is simply
net income plus non-cash charges Plus or mindus to changes in working capital this is the amount of
cash flow that a business produced from operating
itself During the period from there we next need
to account for Capital expenditures this would be cash outlay spent on things like property plant
and Equipment all of which are fixed tangible
assets that a business uses to operate itself
now those Capital expenditures are not expens immediately on the income statement rather
since they have a long duration life to them the way that we expense them on the income
statement would be through taking a depreciation
charge during that specific period now that
depreciation charge could be recorded in one of two places either in cost of goods sold if that
equipment is used to make the product or service
or as an operating expense if that property
plant equipment is used for General Corporate purposes the next line I'm going to hear would
be any cash outlays for Acquisitions now making acquisition could actually impact every single
part of the company's income statement because
被收購企業的損益表將被併入我們的損益表。下一個項目將是投資的出售。投資的出售將會
11:04
the acquired business income statement would get
incorporated into our income statement the next line item here would be sale of an investment
the sale of investment would be accounted for
in nonoperating income if it resulted in an
income to us and the final number here is cash flow from investing activities which is all
the cash inflows and outflows related to making
接下來的數字將與公司債務餘額的任何變動有關。我們可以借入新錢，這會增加我們的債務餘額，或者償還
11:25
investments in the business the next number here
would be related to any changes in the company debt balance we could either borrow new money
which would increase our debt balance or pay down
debt that we already have which would reduce our
debt balance now the amount of debt that we have directly impacts how much interest expense that
we pay which would directly impact nonoperating
expenses the next number here to track would be
if the company issued or repurchased any stock if the company issued stock that would increase
our shares outstanding and if it repurchase
stock that would decrease the shares that we
have outstanding the next number here would be any dividend payments that were made those
dividend payments would be made to each of the individual shareholders which is tracked on the
income statement and that brings us to our next
total which is total cash flow from financing
activities from there we add up the net income cash flow from operating activities cash flow
from investing activities and cash flow from
financing activities and that gives us the total
change in cash during that specific period we then take that change in cash and add it to the
cash at the start of the period which gives us
籌資活動，這讓我們得到特定期間內的現金總變動。然後我們將這個現金變動加上期初現金，就得到
12:32
the total cash at the end of the period so that's
how the income statement relates to the company's cash flow statement that brings us to the final
connection which is how the balance sheet connects to the cash flow statement here we have best
coffee company's balance sheet and cash flow
statement and to show you how these two statements
connect I'm going to go line by line to the cash flow statement now we already talked about net
income which is the top number on the cash flow statement net income directly impacts the retained
earnings that is on on a company's balance sheet
next let's account for the company's non-cash
charges if a company records a depreciation charge that would lower the fixed assets that
the company keeps on the balance sheet if a
company takes an amortization charge that would
lower the total value of intangible assets that the company keeps on its balance sheet finally if
a company takes stock-based compensation expense
記錄一筆攤銷費用，這會降低公司資產負債表上的無形資產總值。最後，如果公司發生股票選擇權薪酬費用，
13:21
that would increase the amount of additional
paid in capital that a company has and decrease the amount of retained earnings that a company
has the next category here is changes in working
這會增加公司的資本公積（增資溢價）金額，並減少公司的保留盈餘金額。下一個類別是營運資金的變動，
13:31
capital and there are multiple categories that
can be affected on the company's balance sheet first would be the company's receivable balance
during a period a company can either increase its receivable balance which would be bad for cash
flow or decrease its receivable balance which
would be good for cash flow it's a similar story
for the company's inventory balance if a company's inventory level is increasing that results in a
cash outflow and if a company's inventory level
is decreasing that result results in a cash
inflow the next number here is in a company's account's payable and it's the opposite impact of
receivables and inventory if a company's accounts payable balance is increasing that is good for
cash flow and if a company's account's payable
balance is decreasing that's bad for cash flow
but then we take all of those changes together receivables inventory and payables which will have
a severe impact on the direction of a company's
cash production the next number here would be
a company's Capital expenditures or spending on property plant equipment now there are multiple
ways that spending on Capital expenditures can impact the company's balance sheet if those
Capital expenditures were paid for in cash
that would decrease the company's cash balance if
those Capital expenditures were paid for with the issuance of debt that would increase the company's
debt balance finally those Capital expenditures
會減少公司的現金餘額。如果這些資本支出是透過發行債務支付，會增加公司的債務餘額。最後，這些資本支出
14:47
would be added to the company's fixed asset
balance which would increase the fixed asset that the company has on its balance sheet next let's
talk about Acquisitions if a company pays for an acquisition in cash that that would decrease its
cash balance if a company pays for an acquisition
by using debt that would increase its debt balance
if a company pays for that acquisition with Equity that would directly impact the amount of
equity issuance that a company has finally
Acquisitions would also impact the company's
Goodwill balance remember that Goodwill is the premium paid to acquire another business over
the fair value of its tangible assets so making
that acquisition would result in an increase in
the company's Goodwill balance finally when one company acquires another the acquirer takes full
control of the acquiree's balance sheet so that
could literally impact every single category on
a company's balance sheet if it results in buying another business outright next category here would
be sale of Investments generally speaking when a
company sells an investment that results in a
cash infusion so this would directly impact the company's cash balance at the same time the sale
of an investment where a company divested one of
its pre Acquisitions could result in the company
decreasing its Goodwill balance moreover depending on the nature of the asset it could also decrease
the company's long-term asset category related to
減少其商譽餘額。此外，根據資產的性質，這也可能減少公司與被出售資產相關的長期資產類別。
16:11
the asset that was sold for Investments the next
category here would be changes in the company's debt if the company borrowed money that would
result in an increase in the company's cash
下一個類別是公司債務的變動。如果公司借款，這會導致公司現金增加。
16:21
balance and a similar increase in the company's
debt balance if the company repaid debt that it already had that would result in the decrease of
the company's cash balance and a decrease in the
餘額以及公司負債餘額的類似增加；如果公司償還既有債務，將導致公司現金餘額減少，以及
16:33
company's debt balance too it's a similar story
for the issuance or rep purchas M of stock if a company Issues new stock that generally results
in an increase in the company's cash balance and
an increase in additional paid in capital if
a company repurchases stock that results in a decrease in the company's cash balance and a
decrease in the company's retained earnings the
額外實收資本的增加。如果一家公司回購股票，則會導致公司現金餘額減少，以及公司保留盈餘的減少。
16:54
next number here would be dividend payments if
a company pays a dividend to its investors that results in a decrease in its cash balance and
a decrease in the company's retained earnings
balance now as we've already talked about the cash
flow statement tracks a changes in a company's cash balance from the start of a period to the
end of the period we take that change in cash and we add it to the company's cash balance
at the start of the period which gives us the
total cash balance at the end of the period which
goes directly on the balance sheet to become the company's new cash balance now an important caveat
to understand is that not all companies use these
exact terms and layouts when they're making their
own financial statements companies have a lot of leeway with the categories that they use to
create their financial statements and even with what they call their financial statements
to make this easier to understand I created a
free ebook that has all of the different names
that you might see used on a company's financial statements if you want a free copy of that ebook
simply visit LongTermMindset.co/fssebook or
免費的電子書，裡面包含了你可能會在公司財務報表上看到的所有不同名稱。如果你想要一份免費的電子書，
17:55
click the link in the video description well
thanks so much for watching I hope that this this video was useful if so give it the thumbs
up that really helps us out on YouTube if you want to keep learning accounting for free I
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