3 Financial Statements

Question 1

Walk me through the Income Statement

Answer 1

The Income Statement gives the company’s revenue and expenses, and goes down to Net Income, the final line on the statement.

Question 2

Walk me through the Balance Sheet

Answer 2

The Balance Sheet shows the company’s Assets – its resources – such as Cash, Inventory and PP&E, as well as its Liabilities – such as Debt and Accounts Payable – and Shareholders’ Equity. Assets must equal Liabilities plus Shareholders’ Equity.

Question 3

Walk me through the Cashflow Statement

Answer 3

The Cash Flow Statement begins with Net Income, adjusts for non-cash expenses and working capital changes, and then lists cash flow from investing and financing activities; at the end, you see the company’s net change in cash.”