Financial Statements

Financial statements are reports that show the financial activities and condition of a business. They help people understand how the company is doing. There are four main types of financial statements:

  • Balance Sheet: This shows what the company owns (assets) and what it owes (liabilities) at a specific point in time. It also shows the owners' equity, which is the value left after paying all debts.
  • Income Statement (Profit and Loss Statement): This shows how much money the company made and spent over a specific period. It helps people see if the company is making a profit or a loss.
  • Cash Flow Statement: This shows the money coming in and going out of the company. It helps people understand how the company is managing its cash.
  • Statement of Equity: This shows the changes in the owners' equity over a specific period. It includes things like profits or losses, investments made by the owners, and dividends paid out to shareholders.

Together, these financial statements give a clear picture of the company's financial health and performance.