# Financial Statements

> Read, interpret, and explain the three primary financial statements — income statement, balance sheet, and cash flow statement — and how they connect. Use when analyzing company performance, preparing reports, or explaining results to non-finance stakeholders.

- Skill: `itsual/financial-statements` (Agent Skill)
- Install (CLI): `npx skillmds@latest add itsual/financial-statements`
- Raw SKILL.md: https://api.skillmd.com/api/skills/itsual/financial-statements/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: itsual (https://skillmd.com/u/itsual)
- Updated: 2026-09-21
- Page: https://skillmd.com/skills/itsual/financial-statements

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# Financial Statements

## Overview

Financial statements are the formal language of business performance and position. Understanding how P&L, balance sheet, and cash flow interlock is foundational to every finance decision.

## When to Use

- Analyzing company or business-unit performance
- Preparing management or board packs
- Explaining results to operators and executives
- Linking operational drivers to financial outcomes

## Core Statements

- **Income statement (P&L)** — revenue, costs, profit over a period
- **Balance sheet** — assets, liabilities, equity at a point in time
- **Cash flow statement** — operating, investing, financing cash movements

## Principles

- Profit is not cash — always reconcile
- Accrual vs cash timing drives many “surprises”
- Read statements with the business model in mind
- Notes and policies matter as much as the totals

## Verification

- [ ] Articulates how the three statements connect
- [ ] Separates accounting profit from cash generation
- [ ] Highlights material line items and movements with drivers