Motley Fool Money Guide to Financial Statements (1 of 2)
Apr 2, 2022
Dive into the world of financial statements using a burrito as the perfect analogy. Discover how balance sheets and income statements reveal a company's financial health, with Chipotle leading the charge. Uncover a crucial metric that showcases pricing power and what it truly means to buy a stock. Plus, learn about the significance of net income for shareholders and its link to cash flow. It's a delicious dive into finance!
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Balance Sheet Basics
- The balance sheet always balances, hence the name.
- Assets equal liabilities plus shareholders' equity.
Chipotle Example
- John Rotonti uses Chipotle (CMG) as a real-world example to explain balance sheets.
- He breaks down Chipotle's assets, liabilities, and equity.
Assets and Liabilities
- Assets represent what a company owns, listed from most to least liquid.
- Liabilities are what a company owes, also ordered by liquidity.