Financial Statement

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Definition of 'Financial Statement'

A financial statement is a report that summarizes a company's financial transactions and provides important information about its financial performance. Financial statements are typically prepared at the end of an accounting period, such as a quarter or year, and include three main statements: the income statement, the balance sheet, and the statement of cash flows.

The income statement shows a company's revenues, expenses, and net income or loss over a specific period of time, such as a quarter or a year. It provides a snapshot of a company's profitability, showing how much money the company earned and how much it spent during the period.

The balance sheet shows a company's assets, liabilities, and shareholders' equity at a specific point in time, such as the end of the year. It provides a snapshot of a company's financial position, showing what it owns, what it owes, and the amount of shareholder equity in the company.

The statement of cash flows shows the sources and uses of cash by a company during a specific period of time, such as a quarter or a year. It provides a snapshot of a company's cash flow, showing where its cash is coming from and where it is going.

Financial statements are important for a variety of stakeholders, including investors, creditors, and management, as they provide key information about a company's financial health and performance. They are typically audited by independent auditors to ensure their accuracy and reliability.

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