Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports

Publisher’s Note: This title is now available under a new edition, Financial Statements ISBN 9781632652072. This edition replaces all previous editions of this bestselling title based on the revised and expanded edition now corrected and back to the basics.

Over 200,000 copies sold!

Thomas R. Ittelson’s master work for entrepreneurs, non-financial managers, business students, lawyers, lenders, and investors—the bestselling book of its kind, with over 200,000 copies in print—has gotten even better with this 20th anniversary edition.

Ittelson is an expert at translating complicated financial topics in an accessible way for non-financial audiences. In this book, he empowers readers by clearly and simply demonstrating how the three major accounting statements interact to offer a snapshot of a company's financial health.

This book teaches readers how to use specialized accounting vocabulary and makes accessible the structure and purpose of the three major numeric statements that describe a company’s financial condition. Each statement paints a different and essential picture—the “three-legged stool” of company reporting:

• The income statement shows the manufacturing (or service offerings) and selling actions of the company that result in profit or loss during a period. It gives a very important perspective on the company’s performance, its profitability.
• The cash flow statement details cash into and out of the company for a period. You need money to make money. Running out of cash is bad. Duh.
• The balance sheet records at the end of a period, an instant in time, what the company owns and what it owes, including the owners’ stake, called shareholders’ equity.

With two new major topic sections (nonprofit organization accounting and pricing theory for profitability) and spot color reformatting to improve comprehension, this third edition of Financial Statements is simply the clearest and most comprehensive introduction to financial reporting available. No accounting background is required.

Thomas R. Ittelson is a scientist, businessman, author, and teacher with many years of hands-on experience in business development and marking for technical companies. As a consultant to entrepreneurs, Ittelson has written business plans and prepared financial projections that have helped raise more than $500 million in start-up equity capital. Financial Statements was born from the author's efforts to teach client entrepreneurs how to design and use financial statements in their start-up businesses.