Options Made Easy: Your Guide to Profitable Trading, Second Edition

Key Financial Terms

Term	Description and Definition	Comments and Significance
Balance Sheet	The statement of the company’s assets and liabilities at a given “snapshot” in time. It is prepared with the Income Statement and Cash Flow Statement.	This is the part of the company’s quarterly, half yearly, and annual results that shows you the company’s health in terms of assets and liabilities. The company may have increased profits, but has it achieved this by increasing its financial leverage (i.e. more borrowings), and are these borrowings at a healthy level?
Cash Flow	This is net earnings before depreciation, amortization, and non-cash charges. Cash Flow is calculated by adding depreciation to net earnings and subtracting preference share dividends. ...