Financial Statement: A Portrait of Organizational HealthConducting business means making decisions. Businesses must decide whether to reinvest their profits or pay dividends. Lenders must decide whether or not to lend money to a particular company and what interest rate is appropriate to cover the risk associated with the loan. Investors need to determine which stocks will provide the highest return with the least risk. For all of the decisions listed so far (and many more that haven't been mentioned), stakeholders use a company's financial statements to aid in making those decisions. In this article we will examine the three main components of the financial statement: income statement, balance sheet and income statement. The income statement provides a summary of expenses and revenues. The income statement is probably the simplest of all financial statements and is perhaps one of the most important as it shows, at a glance, the profits and losses accrued during the reporting period. As companies pursue profit goals, it's clear why the income statement is an important tool that stakeholders can use to evaluate the health of a company. Some of the major expenses listed on the income statement are cost of goods sold (COGS), depreciation, general and administrative expenses (G&A), interest, and income taxes. COGS are costs directly associated with generating revenue, such as raw materials, overhead and labor. While costs of sales will vary based on the level of output produced, general and administrative expenses are often fixed and include costs such as salaries and commissions. Depreciation is considered a non-monetary expense that estimates the “reduction in the economic value of the firm's plant and equipment” (Melicher & Norton, 2014, p. 358). The depreciation recorded in the income statement represents only the estimate of the depreciation for the period. Accumulated depreciation is recorded on the balance sheet. It is called a balance sheet because liabilities and assets must balance each other. Simply put, liabilities plus owners' equity must equal assets. There are a few categories of assets used in the balance sheet. Current assets are those considered most liquid and consist of “cash and marketable securities, accounts receivable, and inventories” (Melicher & Norton, 2014, p. 360). Fixed assets are property, plant and equipment (PP&E) owned by the company. The value of fixed assets is recorded in the balance sheet as the original cost of the asset less any depreciation. Intangible assets include all other components of a company's value that are not captured by current, fixed assets such as “patents, copyrights, trademarks, franchises, and goodwill” (Investopedia, 2015). Stocks are generally grouped into three categories for corporate balance sheets: preferred stock, common stock, and retained earnings. The last major component of a company's financial statement is the cash flow statement. As the name suggests, the cash flow statement summarizes the cash flow in and out of a company during a specific period. Cash flows are divided into three activities: management, investment and financing. Cash flow from operating activities includes both inflows such as revenue and interest, and outflows such as payments