What Are Financial Statements?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

Financial statements are reports issued by a company that describe the financial activities of the company.

The financial statements are broken down into three different statements:

  • Income Statement - shows the income and expenditure of the company, including things such as depreciation, income tax, interest income etc.
  • Balance Sheet - shows the assets, liabilities and shareholders equity of a firm; it must always balance (i.e. assets = liabilities + shareholders equity).
  • Cash Flow Statement - shows the inflows and outflows of cash and shows whether the firm is actually making or losing money.

Financial statements are usually issued on a quarterly and / or yearly basis and are audited by independent firms. The future performance of a firm is modeled using the financial statements and projecting into the future using appropriate assumptions.

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.