The balance sheet, also referred to as a statement of financial position, is a report that shows the

financial health of the company. It serves as evidence of a company's value and is used to assess
whether it is expanding. Its four main goals are to ascertain the capital investments or financial status of
the company, as well as its value, assets, claims, and overall performance. In this formula, assets are
equal to liabilities plus owner's equity. Assets are also known as inventory, liabilities are the debt, and
owner equity is the investment.

The income statement, also referred to as the profit and loss statement (P&L statement), is a document
that lists the revenue and expenses incurred by a company during a specific period. Because it informs
investors as to whether a company has achieved its desired financial gain or loss, it is regarded as the
most important financial statement.

The cash flow statement includes a breakdown of the cash inflow and outflow. The cash inflow is the
sum of money that is received as a result of financial, investing, and operational activities. The money
that the business spends on its various expenses is known as the cash outflow, on the other hand. The
balance between cash inflow and outflow is the main objective. It will make it easier to monitor the
company's cash flow. The company should also have access to enough liquid cash to cover its immediate
obligations. The formula for this is operating income plus depreciation minus taxes plus change in
working capital.