13 September 2025

Understanding Income Statement, Balance Sheet and Cash Flow Statement is the key to successful investing. Three images are attached of the Income Statement, Balance Sheet and Cash Flow Statement. Understanding these 3 accounting reports on the financial health of the company or business is crucial to successful investing.

The Balance Sheet tracks the assets and liabilities of the company or business. It is a snapshot in time which is stated in the company 10-K or 10-Q.

The Income Statement tracks Income and Expenses of the business. Typically it is over a quarter for 10-Q or quarterly report. It is over a 12 month period for annual 10-K report with a start and end date. It uses accrual accounting. It is also called a “Profit & Loss” statement or “P&L”.

The Cash Flow Statement tracks cash movement over a period of time. That means it has a start and end date. It is like a company checking (cheque) account. It uses cash accounting. Graphics from Brian Feroldi of https://www.longtermmindset.co/.