The Three Reports Every Manager Must Know
I receive three reports. I understand one. I ignore the other two.
"Priya freezes when the board asks about operating cash flow. She knows the P&L cold. She has never opened the cash flow statement."
Key concepts
Income Statement (P&L)
Revenue minus costs over a period. Your scorecard for whether the business earned more than it spent.
Balance Sheet
What you own, owe, and what's left for the owners — at a moment in time. The health check.
Cash Flow Statement
Where cash actually came from and went. Profitable businesses can still run out of cash.
Flashcard deck
Tap a card to flip.
Knowledge check
Which report shows whether the business made or lost money over a period?
A business shows profit on the P&L but is running out of cash. Which report explains why?
The Balance Sheet is best described as:
Gross profit margin declining 3 months in a row. Current ratio below 1 and falling. Operating cash flow negative while P&L shows profit.
Questions to ask your finance team
- 1.Can you walk me through our last Income Statement and explain the three biggest variances vs. budget?
- 2.What is our current ratio? Is that healthy for our industry?
- 3.Is our operating cash flow positive? If not, what's driving the gap?