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Reading Financial Statements
March 30, 2026 · 1 min read
Every publicly traded company publishes financial statements. The three main ones are the income statement, balance sheet, and cash flow statement.
Income Statement
Shows revenue, expenses, and profit over a period (usually a quarter or year). Key line items:
- Revenue: Total money earned from sales
- Net income: What's left after all expenses — the "bottom line"
Balance Sheet
A snapshot of what the company owns and owes at a specific point in time:
- Assets: Cash, property, equipment, inventory
- Liabilities: Debts, loans, obligations
- Equity: Assets minus liabilities — what belongs to shareholders
Cash Flow Statement
Tracks actual cash moving in and out of the business:
- Operating: Cash from core business activities
- Investing: Cash spent on or earned from assets
- Financing: Cash from borrowing, repaying debt, or issuing shares
Why It Matters
A company can be profitable on paper but running low on actual cash. Reading all three statements together gives a more complete picture of a company's financial health.