Financial statements can be used as a roadmap on your business journey to economic success. Using numbers as navigation aids can steer you in the right direction and help you avoid costly breakdowns. Most business owners don't realize that financial statements have a value that goes far beyond their use to prepare tax returns or loan applications.

Review the attached, easy-to-follow guide to help you better understand financial statements.    
 
Understanding Financial Statements

The primary financial statements are represented in the balance sheet and income statement. Learn more about these statements:

• Balance Sheet
• Income Statement- Known also as the profit and loss statement, the income statement shows all income and expense accounts over a period of time; that is, it shows how profitable the business is. This financial statement shows what how much money the company will make after all expenses are accounted for. Remember that an income statement does not reveal hidden problems like insufficient cash flow problems. Income statements are read from top to bottom and represent earnings and expenses over a period of time.
• Prepare a balance sheet, income statement, and/or cash flow statement for your business. Use SBA's Template Forms to build your own financial statements.