Question: Control of Business
Better understanding how the basic financial statements relate to one another and inform one another helps you to better understand your business and keep better track of how the business is faring and anticipate resource needs.
• How does your cash flow analysis differ from your profit and loss (P&L, or income statement)?
• What expenses are reflected on the P&L and not in your cash flow analysis?
• Conversely, what expenses are shown on your cash flow statement and not in your P&L? Why are they different?
• What information exists on your balance sheet that is of interest to banks?
• How else might the information on the balance sheet be used?