Here is a depiction of the accounting book with operating activities and financing activities separated. It describes how the book evolves overtime:
The balance sheet is reformulated into net operating assets and net debt with the balance sheet equation now
Common Shareholders’ Equity = NOA – ND
The income statement is reformulated as
Comprehensive Income = Operating Income – Net Financial Expense
The equations in the middle of the display show how net operating assets, net debt, and shareholders’ equity change over a period. NOA is increased by operating income but reduced by free cash flow (FCF), the net cash from the business. An example is Accounts Receivable that is increased by Revenue but reduced by cash that pays off the receivable. Net debt increases with net financial expense but is reduced by the amount of FCF left over after paying net dividends to shareholders. A reformulated cash flow statement (in Chapter 13) reports the FCF and net payout to shareholders.