What are Financial Statements?
Financial Statements are reports showing a company’s financial performance over a period of time. There are five types of financial statements.
- Income Statement
- Cash Flow Statement
- Balance Sheet
- Statement of Comprehensive Income
- Statement of Changes in Equity
While there are five statements, not all of them are created equal. The Income Statement, Cash Flow Statement and Balance Sheet are by far the most important. They often shed the most relevant insight into the company. Therefore, these three are the major financial statements and are indispensable to investment analysis.
Independent accounting firms often audit these reports to certify that the numbers are fair and in compliance with accounting principles.