Guide to understanding financial statements Generator

How to interpret statements to improve decision making.

What are financial statements?

Financial statements are a set of documents that show your company’s financial status at a specific point in time. They include key data on what your company owns and owes and how much money it has made and spent.

There are four main financial statements:

balance sheetincome statementcash flow statementstatement of retained earnings

Financial statements may be prepared for different timeframes. Annual financial statements cover the company’s latest fiscal year. Companies may also prepare interim financial statements on a monthly, quarterly or semi-annual basis.

Interim statements sometimes include fewer components than year-end statements. For example, they may lack a cash flow statement and a statement of retained earnings.

Financial statements generally give information for both the latest period and the prior period to make comparisons easier. For example, a financial statement covering January 1 to December 31, 2021, would include the statements for both that year and the previous year—January 1 to December 31, 2020.

Financial statements

They’re a snapshot of your business performance—helping you run your company, plan its future, seek financing and much more

Financial statements are a key tool for running your business. They’re a snapshot of your company’s finances and give crucial information about your business performance. They’re also the foundation for planning your future course.

Financial statements are also used by bankers, investors and others to assess the health and liquidity of your business and make decisions that affect it.

“Financial statements show the sustainability of your business and allow you to make educated financial decisions to ensure it is as successful as it can be,” says Grant Godfrey, a Senior Account Manager at BDC.

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