Financial Statement

Explanation: A financial statement is a formal record of the financial activities and position of a business, person, or other entity. These are written reports that quantify the financial strength, performance, and liquidity of a company. The main types of financial statements include the balance sheet, income statement, and cash flow statement.

Example: A company releases its quarterly financial statements, which include an income statement showing revenue, expenses, and profit; a balance sheet showing assets, liabilities, and shareholders’ equity; and a cash flow statement detailing the cash inflows and outflows from operating, investing, and financing activities.

Reference Link: For more information on financial statements, visit Investopedia’s Financial Statement.

FAQs:

  1. What are the main components of a financial statement?
  2. Why are financial statements important?
    • They provide a comprehensive overview of a company’s financial health, performance, and cash flow, essential for decision-making by investors, management, and stakeholders.
  3. How often are financial statements prepared?
    • Typically quarterly and annually, though some companies may prepare them monthly.
  4. What is the difference between an audited and unaudited financial statement?
    • Audited financial statements have been reviewed by an independent auditor for accuracy, while unaudited statements have not.
  5. Who uses financial statements?
    • Investors, creditors, management, regulators, and analysts use them to assess a company’s financial status and performance.