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Financial Statement

A financial statement is a formal record of a company’s financial activities and position. Key financial statements include the income statement, which shows profitability; the balance sheet, which displays assets, liabilities, and equity; and the cash flow statement, which highlights how cash is generated and used. Financial statements are essential tools for stakeholders, including investors, creditors, and management, to assess a company’s financial health and make informed decisions.

Example

A company’s annual financial statements reveal that it has strong cash flow, manageable debt, and steady revenue growth, making it an attractive investment prospect.

Key points

• Provides detailed information on a company’s financial performance and position.

• Includes income statement, balance sheet, and cash flow statement.

• Essential for assessing a company’s health and guiding strategic decisions.

Quick Answers to Curious Questions

Financial statements provide investors with critical insights into a company’s profitability, liquidity, and overall financial stability, guiding their investment decisions.

It shows how a company generates and uses cash, highlighting its ability to meet short-term obligations and fund operations.

Financial statements help businesses assess performance, manage resources, and develop strategies to improve profitability and growth.