ABSTRACT

A company is in operation to make money. If it is not making money, it needs to change its business in a way that enables it to be profitable. But how does one determine whether a company is making money? Public and private companies provide charts of financial numbers to the SEC and state regulatory agencies that are important to read and analyze. One is called the income statement, and the other is called the balance sheet. Both are equally valuable in the information they contain and the story they convey about a company’s performance. Yet, too often, business writers focus on the income statement and ignore the balance sheet, as well as the cash-flow statement.