12. Links between Financial Statements
Each of the three financial statements captures different aspects of a companies financial situation – about operations as a going concern (Income Statement), about actual cash flows – also going beyond Operations to include Investing and Financing (Cash Flow Statement) and the assets and liabilities of the company (Balance Sheet). Therefore it only makes sense that some links exist between all the three statements – income and cash flows for example, income over a year that is not paid out as dividends and change in assets etc. Having an appreciation of these links is a clear indication that conceptually the 3 financial statement have become clear.
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