Ittelson is an expert at translating complicated financial topics in an accessible way for non-financial audiences. In this book, he empowers readers by clearly and simply demonstrating how the three major accounting statements interact to offer a snapshot of a company’s financial health.
This book teaches readers how to use specialized accounting vocabulary and makes accessible the structure and purpose of the three major numeric statements that describe a company’s financial condition. Each statement paints a different and essential picture―the “three-legged stool” of company reporting:
The income statement shows the manufacturing (or service offerings) and selling actions of the company that result in profit or loss during a period. It gives a very important perspective on the company’s performance, its profitability.
- The cash flow statement details cash into and out of the company for a period. You need money to make money. Running out of cash is bad. Duh.
- The balance sheet records at the end of a period, an instant in time, what the company owns and what it owes, including the owners’ stake, called shareholders’ equity.