We are excited to offer our readers a physical version of our piece, “Basics of Financial Statements: A Guide for Private Company Directors and Shareholders.”

The purpose of this piece is to help readers develop an understanding of the three principal financial statements. The balance sheet, income statement, and statement of cash flows are each undeniable components of the “story” that the financial statements tell about a company. Family business directors need to be able to read financial statements to effectively discharge their fiduciary duty to shareholders. Shareholders, on the other hand, gain confidence to independently assess the company’s performance and the effectiveness of management’s allocation of shareholder resources through their ability to analyze financial statements.

After reviewing each statement, we explain how the different statements relate to one another. A comprehensive view of how items on one financial statement relate to items on another is necessary to discern the underlying story or narrative of the company. Finally, we provide some guidance on how to evaluate the three projected financial statements. The critical touchstones for evaluating projected financial performance are the company’s historical results and relevant peer data, when available. For the forecast as a whole, the projected inputs and results should be consistent with the company’s overall story, as revealed in the analysis of the historical financial statements.

We hope this provides you with a helpful resource for your own personal use, as well as a resource to share with your fellow directors & shareholders.

You can download a digital version of the booklet here, or you can request a physical copy of the booklet here.