So, let's see how the three financial statements integrate together.

We start here with the cash flow statement.

The cash flow statement gives me loads of detail of cash going in and out of the business.

Here we've got some cash coming in. So maybe customers have paid their bills and cash going out.

Maybe we've paid some suppliers.

So that gives me the net cash flow for the year and there will be many more lines in a real cash flow statement.

That gives me lots of detail and it helps me explain the change in cash on the balance sheet.

So I may have a balance sheet from a year ago with cash of 100 and I may have a balance sheet now with cash of 120. I can see it has changed by 20, but I want the detail and the cash flow statement gives that to me.

But a balance sheet isn't just made up of assets. It's also made up of liabilities and equity. We can find more detail on equity via another financial statement being the income statement. If I look at retained earnings in equity. I may see that it's gone up from 70 to 90.

So it's gone up by 20, but I want more detail on why that's happened. The income statement shows me that information because retained earnings shows accumulated profits not paid out as dividends.

Where do we find this profit on the income statement? So here's my income statement. Let's assume that the profit was 20. So we have no dividends and that would explain why retained earnings went up by 20 from 70 to 90.

I want to delve into the detail. I want to find out why we earned a profit of 20 that's going to come from your sales minus expenses.

I could look into what made up sales what made up my expenses may be compared to previous years and judge how well the business is doing.

So the three financial statements do come together and give you a broad view of how the business is doing.