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How are the different key financial statements interrelated (Income Statement, Balance Sheet, Cash Flow Statement) ?

How are the different key financial statements interrelated (Income Statement, Balance Sheet, Cash Flow Statement) ?

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Answer #1

The Income statement gives a summary of revenues and expenses of the firm. It provides the Net Income figure earned by the business. The Income Statement also shows the retained earnings figure which is carried to the Balance sheet. The Income statement is also the base for Cash flow statement which requires the Net Income.

The Balance sheet is a picture of the assets and liabilities as on a particular date. This statement also has shareholders Equity which requires the Retained earnings from Income statement. The changes in working capital is used by the Cash flow Statement. The changes in debt is used by the cash flow financing statement which comes from the Balance sheet. Also the cash from Investing activities requires data from the balance sheet.

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