Financial Statement Analysis

Framework

IRON LAW: Read All Three Statements Together

A company can be profitable (Income Statement) but cash-poor (Cash Flow Statement).
A company can have high assets (Balance Sheet) funded entirely by debt.
Reading one statement alone gives an incomplete — and potentially misleading — picture.
ALWAYS read all three and check for consistency.

The Three Statements

Income Statement (損益表) — Did we make money THIS PERIOD?

• Revenue → Gross Profit → Operating Income → Net Income
• Key: Revenue recognition ≠ cash received. Accrual accounting records revenue when earned, not when paid.