Date: 17-01-2021

K – W – L Chart
Topic: Introduction to Financial Statements
What I Know What I Want to Know What I Learned
I knew about the importance I want to know the basics of I learned about the standard
of financial statements. It is a accounting because I was a Pre setters such as IFRS and US
really important factor for engineering student and I GAAP. Also I learned about
employees, Investors, don’t know much about the responsibility and
Shareholders and the accounting. importance of an Auditor in an
management to review the organization.
performance of the company.
It holds prime information of
company’s profit or loss.
I knew about the definition of What does dividend and The information a balance
debt. retained earnings means in thesheet contains of a company’s
language of accounting? financial performance, it’s the
information of a specific time
period. The balance sheet
shows the resources,
company’s obligations and
capital.
The assets in a balance sheet
shows the resources a
company possess to generate
the profit and the liabilities
and equity shows that how
those resources are financed.
What is the difference I learned terms such as Current
between EBIT and EBITDA? Assets, Noncurrent Assets,
Inventories, Book values,
depreciation, Amortization and
Creditors
Depreciation and Amortization The income statement is also a
both seems similar so how are really important factor for a
they differing from each company as it stage the profit
other? and loss generated by a
company during a certain time
period.
By subtracting different types
of expenses, different
measures of profit can be
 calculated. Like if we subtract
cost of sales from revenues we
will get gross profit. Similarly
if additional costs are
subtracted from gross profit,
will give operating income or
operating profit or it is often
referred as earnings before
interest and taxes (EBIT)
Why depreciation and I learned about earnings before
amortization doesn’t deduct interest, taxes, depreciation,
from EBITDA? and amortization (EBITDA).
Operating decisions Earnings per share are
approximated as net income
divided by the number of
shareholders.
Profit and net cash flow The cash flow statement
shows the difference in a
company’s cash balance
reported on the balance sheet
and also indentifies the
sources and uses of cash
during a period.
How financial statements are I learned formulas of current
related to each other and why ratio and quick ratios.(which
this existence of one statement are also known as liquidity
and importance for the other ratios)
statement? Current ratio = Current assets
Current liabilities
Quick Ratio = Cr - Inventories
Current liabilities
*Cr = current assets
Financial statement’s analysis The liquidity ratios may
and all the questions that are indicate the company’s ability
asked in this topic. to pay its short term
obligations but the balance
sheet does not contain a
company’s resources so it’s a
bit difficult to find out the
absolute ability.
I’ve learned all these formulas Formulas of net profit margin,
but I’m unable to understand Return on Assets (ROA),
them properly. I’ve tried to Basic Earning power, debt to
read their explanations again equity ratio, financial leverage,
and again but the outcome was Return on equity (ROE)
same. I want to understand
them rather than just learn
them.