Financial reports are crucial tools for businesses to analyze their financial performance, make informed decisions, and communicate their financial health to stakeholders. They provide a comprehensive overview of a company’s financial position, cash flow, and profitability. Financial reports typically include the income statement, balance sheet, and statement of cash flows.
The income statement summarizes a company’s revenues, expenses, and net income over a specific period, usually a quarter or a year. The balance sheet provides a snapshot of a company’s assets, liabilities, and owner’s equity at a specific point in time. The statement of cash flows summarizes the cash inflows and outflows of a company during a specific period.
Financial reports are used by various stakeholders, including investors, creditors, management, and government agencies, to assess a company’s financial health, profitability, and liquidity. They help businesses identify trends, evaluate performance, make informed investment decisions, and comply with regulatory requirements.
