Financial statements are documents that provide an overview of a company's financial performance and position. They include the balance sheet, income statement, statement of cash flows, and statement of changes in equity.
Financial statements are documents that provide a comprehensive overview of a company’s financial position. They are used to assess the financial health of a company and to make decisions about its future. Financial statements are typically prepared by an accountant or financial analyst and include the balance sheet, income statement, statement of cash flows, and statement of changes in equity.
The balance sheet is a snapshot of a company’s financial position at a given point in time. It includes assets, liabilities, and equity. Assets are resources owned by the company, such as cash, inventory, and property. Liabilities are obligations owed by the company, such as loans and accounts payable. Equity is the difference between assets and liabilities and represents the owners’ stake in the company.
The income statement is a summary of a company’s revenues and expenses over a period of time. It includes sales, cost of goods sold, operating expenses, and net income. The statement of cash flows shows how cash is generated and used by the company. It includes cash from operations, investing activities, and financing activities.
The statement of changes in equity shows the changes in the owners’ equity over a period of time. It includes contributions from owners, distributions to owners, and net income.
Financial statements are important for investors, creditors, and other stakeholders to assess the financial health of a company. They provide insight into a company’s performance and can be used to make decisions about its future. Financial statements should be prepared in accordance with generally accepted accounting principles (GAAP) and should be audited by an independent auditor.