The four financial statements

Concept

In May 2025, Eternal Limited, formerly known as Zomato, reported its Q4 FY25 results. Revenue from operations: ₹5,833 crore. Total income, once other income is added: ₹6,201 crore. Adjusted EBITDA: ₹165 crore. Net profit: ₹39 crore.

That last number is 0.7% of revenue from operations. A company running billions of rupees worth of food and grocery orders every quarter, keeping less than one rupee per hundred. Is that a crisis? Is it normal? Is management destroying value or building it?

You cannot answer that question from any single number. You need all four financial statements, because each one answers a different question and none of them answers the others.

The four are the balance sheet, the income statement, the cash flow statement, and the statement of changes in equity. Every listed company in India files all four with every quarterly and annual result. They are not alternatives or summaries of each other. They are four different lenses on the same business. Miss one and you are reading with part of the picture blacked out.

The balance sheet asks: what does this company own, what does it owe, and what is left for the owners, right now? It carries one date at the top, not a range. It is a photograph, not a film. Eternal's FY25 balance sheet shows substantial cash reserves built from earlier equity fundraising, no meaningful long-term debt, and a growing asset base from Blinkit's dark store expansion. It tells you the financial position of the firm at that moment. It does not tell you how they got there or whether they are heading somewhere better.

The income statement asks: how much did this business earn and spend during a specific period? Unlike the balance sheet, it covers time: a quarter, a half-year, a full year. It starts with revenue at the top, subtracts costs layer by layer, and arrives at net income at the bottom. The journey from revenue to net income is where most of the insight lives. For Eternal in Q4 FY25, revenue from operations was ₹5,833 crore and total income ₹6,201 crore. Total expenses were ₹6,104 crore, which leaves ₹97 crore of profit before tax. Tax brought net profit down to ₹39 crore. The income statement tells you about profitability. It does not show you cash. That distinction matters more than most people expect.

The cash flow statement asks: how much cash actually moved in and out, and through which activities? This is the statement most people underread, and it is often the most revealing. It has three sections. Cash from operations covers the core business: collecting from customers, paying suppliers and employees, the working capital cycle. Cash from investing covers capital expenditure, acquisitions, and the purchase or sale of financial assets. Cash from financing covers equity raised, debt taken on or repaid, and dividends paid. A company can be profitable on the income statement and still be burning cash. It can also show a net loss on the income statement and be generating strong operating cash flows. Eternal is a case in point: despite the thin net margin, the company generates meaningful operating cash flow because food delivery and quick commerce collect from customers quickly while settling with restaurant and grocery partners on slightly longer cycles. The cash flow statement shows you whether the business actually generates cash, which is what determines whether it survives.

The statement of changes in equity asks: how did the owners' stake change during the period? It connects the opening equity balance from last year's balance sheet to the closing balance on this year's, accounting for net income earned, dividends paid, and any new shares issued or bought back. Most readers skip this one. It is worth not skipping. It tells you whether a company is diluting shareholders by issuing new stock, whether it returned capital through buybacks, and how retained earnings built up or eroded over time.

What makes these four statements more than a filing requirement is how they connect. Net income from the income statement flows directly into retained earnings on the balance sheet, increasing equity. Changes in balance sheet line items, a jump in accounts receivable or a drop in inventory, drive the adjustments in the operating section of the cash flow statement. The opening and closing cash balance on the cash flow statement must match the cash line on the balance sheet. Tug one thread and it runs through all four documents. This is why a skilled analyst can sometimes spot a problem in one statement before it shows up in another: the internal logic forces things to be consistent, and when they are not, something has been manipulated or misclassified.

This also explains why analysts who only read the income statement miss so much. The income statement is the most quoted and most headline-friendly of the four. Revenue up 40%. Net profit doubled. But revenue growth paired with deteriorating cash flow can mean the company is booking sales it has not yet collected. Strong net profit paired with rising debt can mean the company is borrowing to fund payroll. The balance sheet and cash flow statement are where the income statement's claims get confirmed or questioned.

Eternal's ₹39 crore net profit on ₹5,833 crore of revenue, read alongside the cash flow statement and balance sheet, is not a crisis signal. It reflects deliberate spending on quick commerce infrastructure: warehouses, dark stores, delivery capacity. That spending flows through the income statement as expenses and compresses net profit. The cash flow statement shows whether those investments are generating returns. The balance sheet shows whether the company has the reserves to sustain the bet. All three together tell you something coherent. Any one alone gives you a number without a story.

Example: Eternal (Zomato) FY25, what each statement says

The income statement says Eternal booked ₹6,201 crore of total income in Q4 FY25, spent ₹6,104 crore running the business, and kept ₹39 crore as net profit. Adjusted EBITDA margin was 2.8% of revenue from operations. Net margin was 0.7%.

The balance sheet at FY25 close shows a company with strong cash reserves from prior equity raises, minimal long-term debt, and a growing asset base from Blinkit infrastructure. Retained earnings still carry accumulated losses from earlier years of heavy investment, but the losses are narrowing.

The cash flow statement is where the story clarifies. Operating cash flow is positive and growing. The core business generates real cash. Investing outflows are significant because Eternal is spending aggressively on dark store expansion. Financing activity has slowed compared to earlier years when large equity rounds were the norm.

The statement of changes in equity shows share capital growing modestly through employee stock option exercises, retained losses narrowing, and total equity holding roughly steady.

A reader who looked only at net profit and stopped there would see 0.7% margins and wonder what went wrong. A reader who went through all four statements would see a cash-generating business investing its operating surplus into a new segment, doing so from a debt-free balance sheet. Those are different conclusions. The difference is whether you read one statement or four.

Go deeper, optional

• Eternal investor relations. The FY25 annual report and quarterly filings. Reading pages 1 to 5 of any quarterly result shows all four statements in their actual format.
• CFI, the three financial statements. A clean explanation of how the statements connect, particularly good on the cash flow bridge from net income.

Cross-module note

This connects to Module 3, Corporate Finance: DCF valuation uses free cash flow, not net income. The income statement gives you the starting point. The cash flow statement adjusts it to reflect what the business actually produced in cash. Knowing this now will make the valuation mechanics in Module 3 much easier to follow when we get there.

Reflection, 2 to 3 minutes

Pick a public company you follow, any listed company whose product you use regularly. Write 2 or 3 lines.

• Which of the four statements would be most revealing for this company right now, and why?
• If net profit is very low but operating cash flow is strong, what does that tell you about how the company is spending money?
• Who cares most about each statement: the CFO, a bank deciding whether to lend, or an investor deciding whether to buy shares?

Appendix

What is EBITDA and why does everyone use it instead of net profit?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It starts with net profit from the income statement and adds back four items: interest expense, tax expense, depreciation, and amortization. The result is a measure of operating earnings that removes the effects of financing decisions, tax jurisdictions, and non-cash accounting charges.

The reason analysts use it is that it makes companies more comparable. Two companies with identical operations can report very different net profits if one is debt-financed, and therefore pays interest, while the other is equity-financed and pays none. One might be headquartered in a low-tax jurisdiction, the other in a high-tax one. One might have bought its assets years ago and nearly finished depreciating them, while the other bought them recently and is taking large depreciation charges. EBITDA strips all of that out to focus on the core operating business.

For Eternal in Q4 FY25, reported adjusted EBITDA was ₹165 crore on ₹5,833 crore of revenue from operations, a margin of about 2.8%. Net profit was ₹39 crore. The gap between ₹165 crore and ₹39 crore is depreciation on Blinkit's dark store infrastructure, significant and growing as they build more, plus interest income and expense, and taxes. EBITDA tells you the business is generating meaningful operating earnings. Net profit tells you what remains after the company accounts for the cost of the assets it owns and the capital structure it has chosen.

EBITDA has real limitations. It excludes depreciation, but depreciation exists because assets wear out and eventually need replacing. A business that ignores the cost of replacing its assets is flattering itself. Warren Buffett has called EBITDA "a metric invented to mislead." Perhaps too strong, but the point is that capital-intensive businesses, meaning factories, infrastructure, dark stores, that strip out depreciation are hiding a real cost. For asset-light software companies, EBITDA and operating profit are close. For businesses that own lots of physical infrastructure, the gap is where the honesty lives.

Why do Indian listed companies file results quarterly, and what exactly are they filing?

Indian listed companies file with SEBI under the Listing Obligations and Disclosure Requirements (LODR) regulations. They file unaudited results for Q1, Q2, and Q3 within 45 days of the quarter ending, and audited annual results within 60 days of the financial year ending on 31 March. The Q4 results are therefore filed as part of the full-year audited results rather than as a standalone quarter.

What gets filed each quarter is the income statement, standalone and consolidated, the balance sheet, condensed at quarter end, the cash flow statement, year to date, and key ratios. The full annual report, which includes the complete set of all four statements, notes to accounts, auditor's report, and management discussion, comes once a year.

The distinction between standalone and consolidated matters. Standalone covers only the parent company. Consolidated includes all subsidiaries. For Eternal, standalone results cover Zomato or Eternal the parent entity. Consolidated results include Blinkit (acquired), Hyperpure (B2B supplies), and other subsidiaries. Most analysts work with consolidated numbers because that is what the whole business produces. When the numbers look very different between the two, it usually means significant activity is happening in subsidiaries, which is worth investigating.