What is a Financial Statement?

A financial statement measures the performance and position of a company at a point of time. These are the written records of business activities and financial performance of a company.

A financial statement includes balance sheet, income statements and cash flows statements. These are prepared to give information to outsiders of the company like investors, government and creditors. Companies which are listed on bourses are required to present these statements in a timely manner.

A balance sheet records the company’s assets, liabilities and shareholders’ equity at a specific point in time. The income statement measures the company profit and loss over a period of time. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities.


Lastly, a cash flow statement describes the sources of a company’s cash and how that cash was spent over a specified time period.