mark gomes

Financial statements are reports that summarize a company’s financial performance and position. They help business owners, investors, and others understand how a company is doing financially. There are a few key types of financial statements:

Income Statement (also called a Profit and Loss Statement): This shows the company's revenue, expenses, and profits over a specific period. It helps determine if the company is making money or losing money.

Balance Sheet: This shows the company’s assets, liabilities, and shareholder equity at a specific point in time. It gives a snapshot of what the company owns and owes, as well as the value for its shareholders.

Cash Flow Statement: This tracks the flow of cash in and out of the business, showing how much cash the company is generating or using during a period. It helps to understand the company’s liquidity and ability to meet its short-term obligations.

Statement of Shareholders’ Equity: This shows changes in the equity (or value) of the company's shareholders over time, reflecting things like retained earnings or new shares issued.

Why are financial statements important?

Decision-making: They help owners, managers, and investors make informed decisions about running the business, investing, or lending money.
Assessing Performance: Financial statements let you see whether the company is growing, staying stable, or facing financial trouble.
Attracting Investment: Investors use financial statements to decide whether or not to invest in a company.
Legal and Regulatory Compliance: Companies are often required to produce financial statements to meet legal and tax obligations.
Managing Finances: They help business owners track their own financial health, plan budgets, and identify areas for improvement.

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