Financial Statement Articulation

Articulation Overview

• Articulation = linkage among financial statements that forms one coherent financial story
• Ensures financial performance (over the period) connects to financial position (end of period)

Key Statement Relationships

• Income Statement ➔ provides Net Income
• Statement of Cash Flows ➔ details sources/uses of cash; ending cash ties to Cash on Balance Sheet
• Balance Sheet ➔ captures ending balances of Assets, Liabilities, Equity; these are influenced by the other statements

Role of Statement of Retained Earnings

• Bridges Income Statement & Balance Sheet
• Shows how profits are retained or distributed
• Fundamental equation:
  \text{Ending Retained Earnings} = \text{Beginning Retained Earnings} + \text{Net Income} - \text{Dividends}

Takeaways

• No statement stands alone; each feeds figures to the others
• Articulation provides a full, cohesive view of performance (period) and position (point-in-time)