Financial Statements
IntermediateWhat are the three core financial statements?
Income statement, balance sheet, and cash flow statement. Together they show profitability, financial position, and cash movement.
Quick Definition
The three financial statements are: Income Statement (profit & loss over a period), Balance Sheet (assets, liabilities & equity at a point in time), and Cash Flow Statement (actual cash movements).
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Investor quotes to remember
“If you don't keep learning, others will surpass you.”
“The most dangerous words in investing are 'this time is different'.”
“I only bet when the odds are clearly in my favor.”
“Knowing what you don't know is more important than knowing what you do.”
Related concepts
What does a balance sheet tell me?
A balance sheet is a snapshot: Assets = Liabilities + Shareholders' Equity. Use it to assess leverage (how much debt?), liquidity (can it pay bills?), and capital structure.
What does an income statement tell me?
An income statement (P&L) shows revenues, costs, and profit over a period. Key items: revenue growth, gross margin trend, and net income. It answers: is the company consistently profitable?
What does a cash flow statement tell me?
The cash flow statement tracks actual cash in three categories: operating (core business), investing (asset purchases), and financing (debt & equity). Strong operating cash flow is the gold standard of business health.
How are the three statements connected?
Net income (Income Statement) flows into retained earnings on the Balance Sheet. The Cash Flow Statement bridges the two, explaining why cash changed. Inconsistencies between statements can signal accounting issues.