Lesson One · The Map
A business has three financial statements. Each answers a different question. None of them is enough on its own.
The is the movie — what came in and went out over a period, ending in net income. The is the photo — what the business owns, owes, and is worth on a single date. The reconciles the movie back to actual cash, so you can see whether reported profit translated into money in the bank. Investors who only look at one always get fooled. Investors who read all three — and the footnotes — start to see the real shape of the business.
“Income tells you the story. The balance sheet shows the position. Cash flow shows whether the story was true.”