Reading a Basic Financial Statement

Managers do not need to be accountants, but they must understand where the money comes from and where it goes.

The three questions - Income statement: did we make a profit over a period? - Balance sheet: what do we own and owe at a point in time? - Cash flow: did cash actually move, and when?

Profit and cash are not the same thing. A business can be profitable on paper and still run out of cash — which is why managers watch both.