Income Statement (“P&L”) Cash Flow Statement Balance Sheet An Introduction to Financial Statements

The three essential statements 1.The Income Statement Also called the Profit and Loss Statement Commonly called “The P&L” 2.The Cash Flow Statement 3.The Balance Sheet

The Income Statement: What’s It For? Displays revenues and expenses for a specific period of time (month, quarter, year) Attempts to match the revenue earned with the expenses required to earn it Shows “The Bottom Line” – how much Net Income remains after expenses are deducted from revenues

The Cash Flow Statement: What’s It For? Helps us understand how cash is flowing into and out of a company Very useful in understanding a company’s ability to cover short-term expenses (payroll, operating expenses) Illustrates a company’s ability to generate cash, short- and long-term

The Balance Sheet: What’s It For? Provides a “snapshot” of a company’s financial health Shows a company’s assets (what it has), liabilities (what it owes), and equity (what it’s worth) The only basic financial statement that applies to a specific point in time