Reading Bank Financial Statements And Understanding Them

 The best way to understand bank financial statements is to review them at a slow pace. It is akin to other financial statements; it reveals the bank’s financial health in a nutshell.

The Three Basic Bank Financial Statements

  • income statement
  • balance sheet
  • cash flow
It helps to learn the terms used in bank financial statements. To learn the terms research online. The bank income statement presents the total revenues, expenses, and tax. Note that this statement begins with revenues, next it subtracts total expenses, and deducts taxes. There are several items among these groups: revenues, expenses, and taxes. Look over each item.

The balance sheet presents the total assets and liabilities, plus the bank owner’s equity. Encyclopedia Britannica defines the bank owner’s equity as: the residual interest in the assets of an entity after deducting liabilities.

The cash flow statement presents a picture of the cash flow operations. It summarizes operation activity. It follows the cash in-flow and out-flows. There is also a bank’s statement of owner’s equity. It records previous equity, adjust it to investments, withdrawals, and income resulting in the final equity.

 

 



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