Money, pricing & model

How do I read a P&L, balance sheet, and cash flow statement?

The P&L shows if you're profitable over a period, the balance sheet is a snapshot of what you own and owe, and the cash flow statement shows money actually moving. A company can be profitable on paper and still go broke on cash, so read all three together. Learn to glance at these monthly; it's the founder's most underrated skill.

Go deeper

2 resources, 2 link-checked.

📖 Book
✓ Link checked Paid Intermediate

The most accessible book for non-finance founders on reading a P&L, balance sheet, and cash flow statement. It demystifies the three core statements without requiring an accounting background.

Financial Intelligence for Entrepreneurs

From hbr.org by Karen Berman & Joe Knight book (~304 pages)

  • The three statements each answer a different question, read them together
  • A profitable company can still go broke on cash flow
  • Founders should be able to interpret their own numbers, not just delegate them
Open store.hbr.org →
📄 Article
✓ Link checked Free Beginner

Stripe's founder guides are clean, trustworthy primers on the core financial concepts every founder must track, burn, runway, and cash management. Written for operators, not accountants.

Startup Financials: Burn Rate & Runway, Stripe / Founder Guides

From stripe.com by Stripe guide library

  • Runway = cash balance divided by monthly net burn
  • Cash, not profit, is what actually kills startups
  • Start reacting to a shrinking runway 6-9 months out, not at the last minute
Open stripe.com →

Terms in this answer

Balance Sheet Cash Flow

People also ask

What financial basics does every founder need to understand? 2 → What is burn rate and runway, and how do I calculate them? 2 → How should I manage cash flow so my startup doesn't run out of money? 3 → Do I need an accountant and proper bookkeeping from day one? 2 → What taxes and compliance do I need to handle as an Indian startup? 1 → Should I open a separate business bank account before I even register the company, or use my personal account for now? 3 →

Also in D2C

The same ground, over in Money, pricing & unit economics, our D2C track.

I'm not a finance person, what books/records do I actually need to keep from day one? 3 → What is cohort analysis, and why does it matter more than a single repeat-rate number? 3 →

Also in How Founders Use AI

How founders actually use AI for this, over in Finance & Accounting.

How do founders use AI for bookkeeping, invoicing, runway and burn analysis? 4 → Why build financial models with AI instead of from a blank spreadsheet? 5 →

Also in GTM

The same ground, over in Close deals and price right, our GTM track.

I have a call booked with a real prospect tomorrow. What do I do on it? 4 → I have no idea what to charge. How do I pick a first price? 4 →

Also in Wealth

The same ground, over in Founder money foundations, our Wealth track.

How much should I pay myself as a founder? 2 → How big should my emergency fund be when my income is lumpy? 3 →
eChai Partner Brands The partnership →