Components and Relationships Between the Financial Statements
It is important to understand that the income statement, balance sheet and cash flow statement are all interrelated.
The income statement is a description of how the assets and liabilities were utilized in the stated accounting period. The cash flow statement explains cash inflows and outflows, and will ultimately reveal the amount of cash the company has on hand; this is reported in the balance sheet as well.
We will not explain the components of the balance sheet and the income statement here since they were previously reviewed.
Figure 6.13: The Relationship between the Financial Statements
Cash Flow Statement Basics
InvestingTune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
InvestingA firm’s cash flow statement measures the sources and uses of its cash. The income statement shows how it is financially performing.
InvestingCash flow from operating activities is a section of the Statement of Cash Flows that is included in a company’s financial statements after the balance sheet and income statements.
InvestingThe metrics for the Statement of Cash Flows is best viewed over time.
InvestingA cash flow statement records the amounts of cash and cash equivalents entering and leaving a company.
InvestingDetermine your net worth by making your own cash flow statement and balance sheet.
InvestingPressure to be the best can sometimes push corporations to cheat. Learn how they do it and how to spot it.