Breaking into Wall Street 400 Guide|207Practice Questions With 100% Correct Answers|43 Pages

Walk me through the three financial statements - ️️"The 3 major financial statements are the income statement, balance sheet, and cash flow statement. The income statement gives the companies revenue and expenses, and goes down to net income, the final line on the statement. The balance sheet shows company's assets (resources) such as cash, inventory, and PP&E, as well as its liabilities, such ase debt and accounts payable, and shareholders equity. Assets must equal liabilities plus shareholders equity. The cash flow statement begins with net income, adjusts for non-cash expenses and working capital changes, and then lists cash flow from investing activities and financing activities. At the end, you see the company's net change in cash. Major line items on income statement - ️️Revenue, COGS, SG&A, Operating Income, Pretax Income, Net Income Major line items on balance sheet - ️️Cash, Accounts Receivable, Inventory, PP&E, Accounts Payable, Accrued Expenses, Debt, Shareholders Equity major line items on cash flow statement - ️️Net Income; Depreciation & Amortization; Stock-Based Compensation; Changes in Operating Assets & Liabilities; Cash Flow From Operations; Capital Expenditures; Cash Flow From Investing; Sale/Purchase of Securities; Dividends Issued; Cash Flow From Financing. How do the three statements link together? - ️️"To tie the statements together, Net Income from the Income Statement flows into Shareholders' Equity on the Balance Sheet, and into the top line of the Cash Flow Statement. Changes to Balance Sheet items appear as working capital changes on the Cash Flow Statement, and investing and financing activities affect Balance Sheet items such as PP&E, Debt and Shareholders' Equity. The Cash and Shareholders' Equity items on the Balance Sheet act as "plugs," with Cash flowing in from the final line on the Cash Flow Statement."