Welcome to the how of business with your host, Henry Lopez, the podcast that helps you start,

run, and grow your small business. And now, here is your host. Welcome to this episode of the

how a business. This is Henry Lopez. And on this episode, I'm going to share some additional

thoughts on using your financial statements

to help you run and grow your small business. Specifically, I'm going to dive a bit deeper into

the profit and loss statement and touch on the cash flow statement. At a high level, it's about

answering the question, are you making or losing money in your small business and where is all

your cash?

Previously on episode 397 of this podcast, I explained the essentials of the profit and loss

statement. So if you feel like you need to start with the fundamentals of how to use your P&L,

then you may want to go and listen to episode 397 first. On this episode, as I said,

I'm going to focus on a few more

advanced concepts of the P&L statement and also introduced a statement of cash flows.

Your statement of cash flows or your cash flow statement, those two terms are used interchangeably,

is a financial report to details how cash entered and left your business during a period of time.

In other words, the cash flow statement provides you with a more detailed picture of what happened to your business's cash

during an accounting period like this past month. The same basic calculations that are used for

the cash flow statement can also be used to forecast how much cash you might need in a future period of time.

The cash flow statement is one of the three principal financial statements along with the P&L,

which is also called an income statement and the balance sheet.

These three reports, they're arguably your three most important financial statements for your

small business.

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