Financial statements are documents that provide information about a company's financial performance and position. They are used by a variety of stakeholders, including investors, creditors, and management, to evaluate the financial health of a company.
There are three main types of financial statements: the balance sheet, the income statement, and the cash flow statement.
The balance sheet, also known as the statement of financial position, provides a snapshot of a company's financial position at a specific point in time. It lists a company's assets, liabilities, and equity. The balance sheet is used to evaluate a company's liquidity, or its ability to meet its financial obligations, as well as its solvency, or its ability to pay its debts over the long term.
The income statement, also known as the statement of income or statement of profit and loss, provides information about a company's revenues and expenses over a specific period of time, such as a quarter or a year. It shows a company's net income or loss for the period. The income statement is used to evaluate a company's profitability and efficiency.
The cash flow statement, also known as the statement of cash flows, provides information about a company's cash inflows and outflows over a specific period of time. It shows how a company manages its cash, including cash received from operations, investments, and financing activities. The cash flow statement is used to evaluate a company's liquidity and ability to generate cash.
In addition to these three main financial statements, companies may also provide additional financial information in the form of footnotes, supplementary schedules, and management's discussion and analysis (MD&A).
It's important to keep in mind that financial statements are a backward-looking view of the company's financial performance and position, therefore, they should be used in conjunction with other information such as industry trends, market conditions, and management's prospects for the future to form a more complete view of the company's overall financial health.
financial statements are documents that provide information about a company's financial performance and position. There are three main types of financial statements: the balance sheet, the income statement, and the cash flow statement. They are used by a variety of stakeholders to evaluate the financial health of a company and should be used in conjunction with other information to form a more complete view of the company's overall financial health.