You are reviewing a mid-sized B2B software company’s quarterly close and your CFO wants to confirm that you can explain how the three financial statements connect. The company is profitable, but cash moved differently from net income this quarter because of working capital and financing activity. You have the quarter’s core line items and need to walk through the linkage clearly.
| Metric | Amount |
|---|---|
| Revenue | $12,000,000 |
| Operating expenses | $7,200,000 |
| Depreciation & amortization | $600,000 |
| Interest expense | $200,000 |
| Tax expense | $1,000,000 |
| Accounts receivable increase | $900,000 |
| Accounts payable increase | $300,000 |
| Capital expenditures | $1,400,000 |
| Debt issued | $2,000,000 |
| Beginning cash balance | $3,500,000 |
How would you explain the relationship between the income statement, balance sheet, and cash flow statement using these numbers, and what is the ending cash balance for the quarter?