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How the Three Financial Statements Link

The income statement, balance sheet and cash flow statement are tightly connected.

By the Numoren Editorial Team7 min read

Income statement

Shows revenue, expenses and net income over a period. Net income flows into retained earnings and the top of the cash flow statement.

Balance sheet

A snapshot of assets, liabilities and shareholders' equity at a point in time. It must always balance.

Cash flow statement

Reconciles net income to the change in cash, split into operating, investing and financing activities. Ending cash ties to the balance sheet.

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