How do the three financial statements link together?
- A Net income flows to the cash flow statement and retained earnings; ending cash flows to the balance sheet
- B They are independent
- C Only the balance sheet and income statement link
- D The cash flow statement is optional
Answer
Net income flows to the cash flow statement and retained earnings; ending cash flows to the balance sheet
Being able to walk through this linkage is the single most commonly tested technical question in investment banking interviews.
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