Using Financial Statements to Measure Financial Health

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THE THREE FINANCIAL statements offer three different perspectives on your company’s financial performance. That is, they tell three different but related stories about how well your company is doing financially.

  • The income statement shows the bottom line: it indicates how much profit or loss a company generates over a period of time—a month, a quarter, or a year.
  • The balance sheet shows a company’s financial position at a specific point in time. That is, it gives a snapshot of the company’s financial situation—its assets, liabilities, and equity—on a given day.
  • The cash flow statement tells ...

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