Excellent work on cash flow forecasting! Now let's decode the three essential financial reports that every business owner needs to understand.

Think of these reports as your business's vital signs - they tell you exactly how healthy your company really is.

Engagement Message

Name one term you've seen on a financial report that left you scratching your head.

Meet the "Big Three" financial statements: Income Statement, Balance Sheet, and Cash Flow Statement. Each answers a different crucial question about your business.

Together, they paint a complete picture of your financial health from three different angles.

Engagement Message

If you had to monitor just one of the 'Big Three' statements, which would you pick?

The Income Statement answers "Am I making money?" It shows your revenue minus expenses over a specific period, like a month or year.

Think of it like a report card for profitability - it tells you if your business model actually works.

Engagement Message

What's the difference between being busy and being profitable?

Here's a simple coffee shop example: Revenue $10,000, Cost of coffee beans $3,000, Rent $2,000, Wages $4,000. Net Income = $1,000.

This $1,000 profit shows the business is working, but we need the other statements to see the full picture.

Engagement Message

What expenses do you think this coffee shop might be missing from this simple example?

The Balance Sheet answers "What do I own and what do I owe?" It's like a snapshot of your business's financial position at one moment in time.

Assets (what you own) must always equal Liabilities (what you owe) plus Owner's Equity (what's truly yours).

Engagement Message

If your business closed today, what would you actually own versus what you'd owe?