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What Are The Three Statements

The three financial statements are the income statement, balance sheet, and cash flow statement, each serving distinct purposes in financial reporting. They are interconnected, with net income from the income statement affecting equity on the balance sheet, and changes in balance sheet accounts influencing the cash flow statement. Discounted Cash Flow (DCF) modelling is a valuation method that estimates an investment's value based on future cash flows, utilizing a discount rate to calculate present value.

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42 views1 page

What Are The Three Statements

The three financial statements are the income statement, balance sheet, and cash flow statement, each serving distinct purposes in financial reporting. They are interconnected, with net income from the income statement affecting equity on the balance sheet, and changes in balance sheet accounts influencing the cash flow statement. Discounted Cash Flow (DCF) modelling is a valuation method that estimates an investment's value based on future cash flows, utilizing a discount rate to calculate present value.

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mayankverma189131
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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 What are the three statements?

The three statements refer to the income statement, balance sheet, and
cash flow statement in financial reporting.
 Income statement shows a company's revenues and expenses over a
period of time.
 Balance sheet provides a snapshot of a company's financial position at
a specific point in time.
 Cash flow statement reports a company's cash inflows and outflows
during a period.

How 3 Financial Sttaents are linked


 Ans.
The three financial statements (Income Statement, Balance Sheet, Cash Flow
Statement) are linked through the flow of information and transactions
between them.
 The Net Income from the Income Statement flows into the Equity
section of the Balance Sheet.
 Changes in the Balance Sheet accounts impact the Cash Flow
Statement.
 The ending cash balance on the Cash Flow Statement should match
the cash amount on the Balance Sheet.

DCF modelling known


 Ans.
Discounted Cash Flow (DCF) modelling is a valuation method used to
estimate the value of an investment based on its future cash flows.
 DCF modelling involves forecasting future cash flows, determining a
discount rate, and calculating the present value of those cash flows.
 Discount rate is typically the cost of capital or required rate of return
for the investment.
 The present value of cash flows is then used to determine the intrinsic
value of the investment.
 DCF modelling is commonly used in financial analysis to evaluate the
attractiveness

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