How to Read Your Startup's Financial Statements (P&L, Balance Sheet, Cash Flow)
Written by Aparna Devalla, CPA
Curated by Rubric Financial
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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.
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