My analyzing of cardinal financial statements

3 min readOct 11, 2021


a) The report provided is a summary of the new company’s income and expenses for the first three years of its existence. This is clearly reflected by the facts of loans received and loan repayments in the third year of existence, as well as the lack of movement of finances in certain categories in the first (2018) year shown in the report.

The main things in changes during the years to notice:

· Steady growth of Financial Revenue with a promising positive trend;

· Financial Expense increases every year (business expansion);

· Increase of expenses in all items;

· Expenses that were not there at the start;

· Constant profitability with taxes included;

· Loans for business development started to be repaid in the 3rd year of operation;

· Gradual reaching profitability considering initial start-up costs.

b) These changes can be called positive. They do not show the expected high growth and indicate the difficulties of scaling. However, we are talking about stable income and company payments on early loans. Steady growth should follow.

c) Here are some personal thoughts on the company’s financial performance.

Interest Income grows as the investment generates more income. Fee Income is present from providing related services. This is how Financial Revenue turns out.

Interest Expense is growing, but not as fast as income. Payment Processing Expense too. This means that income is growing, but it is partially compensated by higher expenses.

Among operation expenses, the growth every year is relevant for all categories. However, personnel expenses grow the most. This should be due to the expansion of the staff (project scaling), or a sharp increase in the efficiency of the current staff of the company and, as a consequence, a proportional increase in their salaries. The second option is unlikely.

Otherwise, there is a gradual increase in costs for marketing, logistics, office maintenance, administrative costs, communications, and so on. Everything points to an increase in the company’s activities. The Sales graph decreases from 2019 to 2020 apparently due to a set base of loyal customers and lack of need for further growth of activity in this direction. The quantity transforms into quality.

The rest of the numbers indicate that the company’s activities are succeeding, and the company is significantly increasing revenues. However, it is not 100% known at first glance whether profitability is sustained given the increase in numbers.

Perhaps the company is in a growth phase and increasing debt. This is indicated by an increase in Payables.

Accordingly, the company’s liabilities are increasing in roughly equal proportion to the growth figures. However, I do not see a sharply negative trend (as well as a sharply positive one).

The company started with active investments, but today it has securities and loans. Their value is close to the growing amount of cash as well.

Overall, the company’s profitability is real, and operating income is actively growing each year, with all the profitability items described. Also, the information shows that the company began repaying early loans in their third year of existence, one year after the loans themselves. This is done in part, clearly indicating an inability to pay off in full for 2020.

As a result, the company is coming into profit, but earnings are not entirely positive. The company will be able to reach a stable profit after the settlement of the loans not earlier than in 2 years.