🎯 Goal: Know what the three statements say and where to look for business health.
Three core statements: the income statement (revenue − costs = profit, over a period); the balance sheet (assets = liabilities + equity, at a point in time); the cash flow statement (real cash in/out). Paper profit can look great, but cash flow shows whether the business truly "produces money".
Let’s explore
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Income statement: shows profit/loss over a period (revenue minus costs).
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Balance sheet: a snapshot — Assets = Liabilities + Equity. Too much debt is a risk signal.
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Cash flow statement: real cash in/out. A "profitable" firm with long negative cash flow can be in danger.
1. Which statement shows profit/loss over a period?
→ Income statement
2. The balance-sheet identity?
→ Assets = Liabilities + Equity
3. Assets 80B, liabilities 50B. Equity?
→ 30B
4. Why does cash flow matter even with profit?
→ Paper profit may not be real cash yet
5. Too much debt vs assets is?
→ A risk signal
🎯 Real-life mission
Find a company's financial statements (on its website or the exchange). Point out 3 numbers: revenue, profit, and total debt. Write 1 sentence on the company's financial health.