The 3 Primary Financial Statements are the balance sheet, income statement, and cash flow statement from "summary" of The Personal MBA by Josh Kaufman
The balance sheet, income statement, and cash flow statement are the three primary financial statements used by businesses to provide a comprehensive view of their financial performance and position. The balance sheet is a snapshot of a company's financial health at a specific point in time. It provides a summary of what the company owns (assets), what it owes (liabilities), and the amount of ownership that belongs to its shareholders (equity). By comparing assets to liabilities, stakeholders can determine the company's overall financial strength and stability.
The income statement, on the other hand, shows a company's financial performance over a specified period, usually a month, quarter, or year. It details the company's revenue, expenses, and net profit or loss. The income statement helps stakeholders understand how profitable a company is and whether it is generating enough revenue to cover its expenses.
Lastly, the cash flow statement tracks the flow of cash into and out of a company over a given period. It breaks down cash inflows and outflows into three categories: operating activities, investing activities, and financing activities. By analyzing the cash flow statement, stakeholders can assess a company's ability to generate cash, pay off debts, and fund its operations.
Together, these three financial statements provide a comprehensive view of a company's financial performance, position, and cash flow. By analyzing these statements, stakeholders can make informed decisions about investing in, lending to, or doing business with a company. Understanding how to read and interpret these statements is essential for anyone looking to gain a deeper understanding of a company's financial health and prospects.
