How to Read Your Startup's Financial Statements (P&L, Balance Sheet, Cash Flow)

Why You Need to Read These Yourself

• Investors, board members, lenders, and tax authorities all communicate in the language of financial statements. Founders who can't read their own statements look unprepared in any conversation that matters.
• The three statements are: Income Statement (P&L), what you earned and spent over a period; Balance Sheet, what you own and owe at a point in time; Cash Flow Statement, where cash actually moved over the period.
• They are NOT interchangeable. A startup can be profitable on the P&L while running out of cash (the classic 'profitable startup that dies' scenario). The cash flow statement is the only one that tells you that.
• Reading these is a skill you can learn in an afternoon. Mastering them takes longer, but founders should hit fluency by Series A at the latest.