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Question:
How do the 3 financial statements tie together?
Answer:
Net Income from the bottom line of the Income Statement flows into the top line of the Cash Flow Statement and into Retained Earnings in Shareholder's Equity on the Balance Sheet.
Depreciation is added back and CapEx is deducted on the cash flow statement, which determines PP&E on the Balance Sheet.
Financing activities mostly affect the balance sheet and cash from finalizing, except for interest, which is shown on the income statement.
The sum of the last period's closing cash balance plus this periods cash from operations, investing, and financing is the closing cash balance on the Balance Sheet.
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