What numbers flow from one statement to the next?

The numbers that flow from one statement to the next are the linking figures in the three financial statements : net income, depreciation/non-cash charges, changes in working capital, capital expenditures, financing cash flows, and ending cash. These connect the income statement, cash flow statement, and balance sheet so the totals reconcile.

Quick Scoop

In simple terms, the key flow is:

1. Net income moves from the income statement to the cash flow statement and into retained earnings on the balance sheet.

2. Non-cash items like depreciation are added back in the cash flow statement because they affect profit but not cash.

3. Working capital changes shift cash between periods and affect current assets and liabilities.

4. Capital expenditures and other investing items move through the cash flow statement into long-term assets like PP&E.

5. Financing items such as debt and equity changes affect cash and the liability/equity side of the balance sheet.

6. Ending cash becomes the cash balance on the next balance sheet.

Why it matters

This is the basic linkage that makes three-statement modeling work. If one of these numbers is wrong, the balance sheet will not balance and the model becomes incomplete or inaccurate.

In one example

If a company reports net income, then buys equipment, the net income flows into retained earnings while the equipment purchase shows up as an investing cash outflow and increases PP&E on the balance sheet. That is the core “flow” between statements.

Bottom line

So the short answer is: the main numbers flowing forward are net income, non-cash adjustments, working capital changes, investing cash flows, financing cash flows, and ending cash.