🟠 Advanced 20 minadvanced path
The Three Financial Statements
Every business is summarized by three statements: Income Statement, Balance Sheet, and Cash Flow Statement. Together they tell you how the company is doing.
Learning objectives
- Describe what each statement shows.
- Understand how they connect.
Step-by-step
1. Income Statement
Revenue − Expenses = Net Income. Covers a period (month/quarter/year). Shows profitability.
2. Balance Sheet
Assets = Liabilities + Equity, as of a single date. Shows financial position.
3. Cash Flow Statement
Cash from Operations, Investing, and Financing. Shows how cash actually moved during the period.
4. The links
Net Income flows into Retained Earnings on the Balance Sheet and is the starting point of the Cash Flow Statement.
Key takeaways
- Describe what each statement shows.
- Understand how they connect.
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