Financial Statements’ gobbledygook and double-speak

by Malcolm Simister

For many people, Financial Statements are gobbledygook, often caused by the confusing language used in them and frequent double-speak.

For example, inventory to some is stock to others and what some call stock others call shares but inventory certainly isn’t shares!

While most businesses have revenue, professional services firms have fees and while we depreciate some assets we amortise others but that’s the same thing.

Costs are expenses, debtors are receivables and creditors are payables but provisions aren’t groceries while fixed assets have disappeared so perhaps they weren’t fixed at all.

Sometimes, earnings are called profit except in not-for-profits which have a surplus, unless they have a deficit which in for-profit businesses is called loss.

And then there’s the Income Statement or the Profit & Loss Account (same, same) and the Balance Sheet or Statement of Financial Position (same again) but the Cash Flow Statement has only one name, unless it’s the Statement of Cash Flows. When this gobbledygook and double-speak is simplified into plain English, Financial Statements are much easier to understand.

This is what my courses do. In them, I explain how to read, interpret and analyse Financial Statements in plain English. I clear the mists and translate the jargon. Try the free course to see if it resonates with you.

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