Vinu: Manu, I’m not from an accounting background. Financial statements look intimidating. Where should an entrepreneur even start?

Manu: Start with intent, not accounting, Vinu. Ask one simple question: Is my business making money, staying liquid, and growing safely? Financial statements answer only these three.

Vinu: Which statement should I read first?

Manu: Begin with the Profit & Loss Statement. It tells you whether your business is profitable. 

Manu: Three lines only—Revenue, Major Expenses, Net Profit. If profit is shrinking despite higher sales, costs are leaking.

Vinu: What comes next after P&L?

Manu: The Balance Sheet. Think of it as a financial photograph. 

Manu: Compare Own Funds vs Borrowed Funds. 

Manu: Very important. If current assets are ₹40 lakh and current liabilities are ₹50 lakh, you’re short by ₹10 lakh. Even a profitable business can fail due to cash stress.

Vinu: Many bankers ask for cash flow statements. Why?

Manu: Because profit is an opinion, cash is a fact.

Vinu: So, I don’t need to understand debit and credit?

Manu: Not at all. Focus on trends and relationships—sales vs profit, debt vs net worth, profit vs cash.

Vinu: What’s the biggest mistake entrepreneurs make while reading statements?

Manu: Looking at them only during tax filing or loan applications. Financial statements should be reviewed every month.

Vinu: In one line, what’s your advice to non-accountant entrepreneurs?

Manu: Read financial statements like a business dashboard—not for accounting perfection, but for decision clarity.

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