Financial Statements

Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. Financial statements include the

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Balance Sheet

The balance sheet provides an overview of a company's assets, liabilities, and stockholders' equity as a snapshot in time.

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Cash flow statement

The cash flow statement (CFS) measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments. The cash flow statement complements the balance sheet and income statement.

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Income statement

The income statement covers a range of time, The income statement provides an overview of revenues, expenses, net income, and earnings per share.

Advantages of Financial Statements

  • To determine the ability of a business to generate cash, and the sources and uses of that cash.
  • To determine whether a business has the capability to pay back its debts.
  • To track financial results on a trend line to spot any looming profitability issues.
  • To derive financial ratios from the statements that can indicate the condition of the business.
  • To investigate the details of certain business transactions, as outlined in the disclosures that accompany the statements.
  • To use as the basis for an annual report, which is distributed to a company’s investors and the investment community.