Three Financial Statements
What are the Three Financial Statements?
Financial statements are reports issued by a company that describe the financial activities of the company. Thedown into three different statements:
- Income Statement – shows the income and expenditure of the company, including things such as depreciation, , .
- Balance Sheet – shows the assets, and 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.