How do the three financial statements link together?

The three statements are the income statement, the balance sheet and the cash flow statement. The income statement shows revenue, expenses and profit over a period, the balance sheet shows what the company owns and owes at a point in time, and the cash flow statement explains how cash changed over the period. The main link is net income. Net income from the bottom of the income statement is the first line of the cash flow statement. From there I add back non-cash expenses like depreciation and adjust for changes in working capital to get cash flow from operations. Adding up operations, investing and financing gives the net change in cash, and that ties to the cash balance on the balance sheet. Net income also flows into retained earnings in shareholders' equity, after dividends. Assets have to equal liabilities plus equity.

The three statements are the income statement, the balance sheet and the cash flow statement. The income statement shows revenue, expenses and profit over a period, the balance sheet shows what the company owns and owes at a point in time, and the cash flow statement explains how cash changed over the period. The main link is net income. Net income from the bottom of the income statement is the first line of the cash flow statement. From there I add back non-cash expenses like depreciation and adjust for changes in working capital to get cash flow from operations. Then cash flow from investing picks up capital expenditures, and cash flow from financing picks up debt raised or repaid, share issuance, buybacks and dividends. Adding up operations, investing and financing gives the net change in cash, and that ties to the cash balance on the balance sheet. Net income also flows into retained earnings in shareholders' equity, after dividends. The other balance sheet items link the same way. Capital expenditures increase PP&E and depreciation reduces it, debt raised or repaid changes the debt balance, and changes in receivables, inventory and payables show up in cash flow from operations. The check is that the balance sheet still balances. Assets have to equal liabilities plus equity. If they don't, something wasn't carried through all three statements.