does invontery come in to the income statement????,how can i know from balancesheet companies financial position good or bad ??? what is retinedearnings ?
Also look for the footnote of income statement and balance sheet to see valuation method of inventory.
Only balance sheet may not tell you the true picture of a company, you need to check cash flow statement and compare the balance sheets of two year to see the company performance and health.
1- Inventory (stock unsold)is the stock in hand is reflected in the balance sheet.
2-There are various parameters to evalue the financial ratios which tells a strength about the company (refer to Financial Analysis of B/S), and it is up to your requirement.
3-Retained Earnings are the carried forward Net profit of the prior years which is kept in the company for future expansion and it works out in balance sheet as Capital of the company.
Your inquiry is actulaty 3 questions, and the answers are as follows:
1-Inventory is reflected in the income statement as Cost of Goods Sold; but the stock in hand is reflected in the balance sheet
2-There are multiple financial ratios that tells a story about the company, and it is up to your analysis to say whether it is a solid financial or not; but mainly look for the Leverage, which is the total liabilities of the company divided by the net worth, and of course the less this number the better; also the liquidity ratios and the profitability ratios, and it is a must to compare those figurers as a trend; if possible you can compare to peer in the industry itself.
3-Retain Earning are the net profit of the previous year that is kept in the company.
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Also look for the footnote of income statement and balance sheet to see valuation method of inventory.
Only balance sheet may not tell you the true picture of a company, you need to check cash flow statement and compare the balance sheets of two year to see the company performance and health.
I agree with Ksalem and further add..
1- Inventory (stock unsold)is the stock in hand is reflected in the balance sheet.
2-There are various parameters to evalue the financial ratios which tells a strength about the company (refer to Financial Analysis of B/S), and it is up to your requirement.
3-Retained Earnings are the carried forward Net profit of the prior years which is kept in the company for future expansion and it works out in balance sheet as Capital of the company.
Your inquiry is actulaty 3 questions, and the answers are as follows:
1-Inventory is reflected in the income statement as Cost of Goods Sold; but the stock in hand is reflected in the balance sheet
2-There are multiple financial ratios that tells a story about the company, and it is up to your analysis to say whether it is a solid financial or not; but mainly look for the Leverage, which is the total liabilities of the company divided by the net worth, and of course the less this number the better; also the liquidity ratios and the profitability ratios, and it is a must to compare those figurers as a trend; if possible you can compare to peer in the industry itself.
3-Retain Earning are the net profit of the previous year that is kept in the company.