The purpose of financial statements is investment analysis using the financial position (Balance Sheet), profitability (Income Statement) and operating, investing, and financing activities (Cash Flow Statement) of a company.

Financial Statements

Financial statements are used by shareholders, executives, employees, investors, potential lenders such as banks or vendors, and any other person or institution that needs to analyze a company.

Company Financial Statements

The Balance Sheet displays a snapshot of assets, liabilities, and net worth (book value) of a company at a specific point in time (i.e. Dec. 31, 2017).

It is the best accounting statement for analyzing the financial position of an individual or company.

The Income Statement provides the revenues, expenses, and profits (or losses) of an entity over a specific period of time (usually quarterly or annually).

The Cash Flow Statement shows where an entity’s cash is coming from and where it is going to.

This statement separates the cash flow from operations, investing, and financing activities in a consolidated statement.