Financial Statement Explainer

The three statements for a small business owner. Income statement: shows revenue minus expenses over a period; key lines are revenue, gross profit, net income; it answers did we make a profit? Balance sheet: a snapshot at a point in time; key lines are assets, liabilities, equity; it answers what do we own and owe? Cash flow statement: shows cash moving in and out; key sections are operating, investing, financing; it answers where did the cash actually go? How they connect: net income from the income statement flows into equity on the balance sheet and is the starting point of the cash flow statement. A business can show profit yet run out of cash, which is why all three matter. This is an educational explainer, not financial advice.