Listen to a Business English Dialogue About Financial statement
Kinsley: Hi Kevin, do you know what a financial statement is?
Kevin: Yes, a financial statement is a document that provides information about the financial activities and position of a company, including its income, expenses, assets, and liabilities.
Kinsley: That’s correct. Financial statements are crucial for stakeholders like investors and creditors to assess the performance and health of a business.
Kevin: How often are financial statements prepared?
Kinsley: Financial statements are typically prepared quarterly and annually, following standard accounting periods.
Kevin: What are the main components of a financial statement?
Kinsley: The main components include the income statement, balance sheet, and cash flow statement, each providing different insights into the company’s financial performance.
Kevin: How does the income statement differ from the balance sheet?
Kinsley: The income statement shows the company’s revenues and expenses over a specific period, while the balance sheet provides a snapshot of its assets, liabilities, and equity at a particular point in time.
Kevin: What about the cash flow statement?
Kinsley: The cash flow statement details the inflows and outflows of cash during the reporting period, helping assess a company’s ability to generate cash and meet its financial obligations.
Kevin: Are there any regulations regarding financial statements?
Kinsley: Yes, financial statements must adhere to generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) to ensure consistency and comparability.
Kevin: How do investors use financial statements?
Kinsley: Investors use financial statements to analyze a company’s financial health, profitability, and growth potential before making investment decisions.
Kevin: Thanks for the explanation, Kinsley. Financial statements seem essential for understanding a company’s financial status.
Kinsley: You’re welcome, Kevin. They indeed provide valuable insights for investors and other stakeholders in evaluating a company’s performance and prospects.