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What is a Financial Statement?

A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis:

  1. A balance sheet, also referred to as a statement of financial position, reports on a company’s assets, liabilities, and ownership equity at a given point in time.
  2. An income statement, also known as a statement of comprehensive income, statement of revenue & expense, P&L or profit and loss report, reports on a company’s income, expenses, and profits over a period of time. A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period.
  3. A statement of cash flows reports on a company’s cash flow activities, particularly its operating, investing and financing activities.

For large corporations, these statements may be complex and may include an extensive set of notes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.


As a financial analyst I know the importance of creating models which are modular and scalable. It is one of the key skills to survive and thrive in the financial services industry.

If you’ve done financial modeling, you’ll know that there is a big difference in creating hypothetical models and creating the models of actual companies. When you start creating the models for an actual company and start entering the actual numbers in your model, hundreds of things can go wrong!

Financial Statements (Income statement and Balance sheets)are the key starting points in building financial models for any company. In this post, we guide you (Not once but thrice!) to understand creating these statements from scratch.

Financial Modeling Master Class

Download this 15 Page FREE E-Book and 4 Excel Templates

You can download this 15 page e-book that gives you a step by step process to create templates for the financial statements. We have taken LinkedIn as a case study and will help you learn the creation of the models. We start form the very basic – extracting data, to creating the template, cleaning the data and finally creating the statements. And you would learn this step by step!

Why Are we Giving this for FREE?

Just because we are Awesome!

Also Consider Joining Financial Modeling Training

EduPristine is a premier training provider for financial modeling, valuation, investment banking and Risk management courses. If you want to have an in-depth Financial Modeling Expertise, consider joining our Financial Modeling Course.

If you are in US or Middle East, we are also running our classroom programs. If you want to know more, write to us on


Also read our blog on Cash Flow Templates