Skip to Content
Financial Intelligence, Revised Edition
book

Financial Intelligence, Revised Edition

by Karen Berman, Joe Knight, John Case
January 2013
Beginner content levelBeginner
272 pages
6h 32m
English
Harvard Business Review Press
Audiobook available
Content preview from Financial Intelligence, Revised Edition

14

The Income Statement Affects the Balance Sheet

So far we have been considering the balance sheet by itself. But here’s one of the best-kept secrets in the world of financial statements: a change in one statement nearly always has an impact on the other statements. So when you’re managing the income statement, you’re also having an effect on the balance sheet.

PROFITS AND EQUITY

To see the relationship between profit, from the income statement, and equity, which appears on the balance sheet, we’ll look at a couple of examples. Here’s a highly simplified balance sheet for a brand-new (and very small!) company:

Say we operate this company for ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Financial Intelligence

Financial Intelligence

Karen Berman, Joe Knight
Financial Statement Analysis, 5th Edition

Financial Statement Analysis, 5th Edition

Martin S. Fridson, Fernando Alvarez
Valuation, 7th Edition

Valuation, 7th Edition

McKinsey & Company Inc., Tim Koller, Marc Goedhart, David Wessels

Publisher Resources

ISBN: 9781422144121