Beginner · 4 lessons · 32 min

Reading Financial Statements

Learn to read the income statement, balance sheet and cash flow statement — and see how the three connect so you can spot errors before an investor does.

What you'll learn

• Read an income statement and compute gross margin, operating income and burn
• Read a balance sheet and explain what each section tells a lender or investor
• Explain why profit and cash differ using the cash flow statement
• Trace how one transaction flows through all three statements

Lessons

1. 1The income statementRevenue, cost of revenue, operating expenses and net income — what the business earned over a period.8 minFree
2. 2The balance sheetA snapshot of what the company owns, owes and what's left for shareholders on a single date.8 minAccount
3. 3The cash flow statementWhy profit and cash differ, and how operating, investing and financing activities explain the change in your bank balance.9 minAccount
4. 4How the three statements connectTrace one transaction through all three statements and use the links between them to catch errors.7 minAccount

Lesson 1 is open to everyone. The rest are free with a ClearBooks account.