There are three key financial statements; the Income Statement, the Balance Sheet and the Cash Flow Statement. Each provides unique information. The statements are all interconnected, and together they give an overview of the company’s operating activities and financial status.
An income statement is one of the three important financial statements used for reporting a company’s financial performance over a specific accounting period, with the other two key statements being the balance sheet and the statement of cash flows.
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A balance sheet is a financial statement that reports a company’s assets, liabilities and shareholders’ equity at a specific point in time, and provides a basis for computing rates of return and evaluating its capital structure. It provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.
Cash flow statement (CFS)
The cash flow statement, is a financial statement that summarises the amount of cash and cash equivalents entering and leaving a company. The CFS measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.