Financial Statement

Definition

A financial statement is a document that provides a comprehensive overview of a company's financial position. It includes a balance sheet, income statement, statement of cash flows, and statement of changes in equity. The financial statement is used to assess the financial health of a company and to make decisions about its future.

Example

For example, a company's financial statement might include the following information:

Balance Sheet: This shows the company's assets, liabilities, and equity.

Income Statement: This shows the company's revenues, expenses, and net income.

Statement of Cash Flows: This shows the company's cash inflows and outflows.

Statement of Changes in Equity: This shows the company's changes in equity over time.

Why it Matters

Financial statements are important for a variety of reasons. They provide a snapshot of a company's financial health, which can be used to make decisions about its future. They can also be used to assess the performance of a company over time. Financial statements are also used by investors and creditors to assess the risk of investing in or lending to a company. Finally, financial statements are used by regulators to ensure that companies are complying with applicable laws and regulations.