Each of the components of your financial statements provides unique information; however, they must be assessed together to get a complete picture of a company. The balance sheet shows the financial position at a point in time, the income statement demonstrates the company’s ability to manage expenses and revenues (if you are far enough along to have revenues), and the statement of cash flows shows which activities used and/or produced cash during the year.
You can gather useful information by looking at the statements separately, but they’re even better together. By comparing net income to net cash inflows, you can determine …read more
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