How do the two financial statements complement each other?

The two primary financial statements, the income statement and the balance sheet, complement each other in providing a comprehensive view of a company's financial performance and position. The income statement outlines the revenue and expenses over a specific period, ultimately resulting in net income or loss. It highlights the profitability of the business and gives insights into its operational efficiency. On the other hand, the balance sheet represents the company's financial position at a specific point in time, showcasing its assets, liabilities, and equity. It reveals the company's overall financial health and solvency. By examining both statements together, stakeholders can assess the profitability, liquidity, and stability of the business, enabling better decision-making and financial analysis.

This mind map was published on 21 September 2023 and has been viewed 139 times.