What are the key financial statements prepared by a company and what information does each statement provide?

Key Financial Statements Prepared by a Company

When it comes to financial reporting, companies prepare several key financial statements to provide stakeholders with essential information about the company's financial performance. The key financial statements prepared by a company are:

1. Income Statement: The income statement, also known as the profit and loss statement, shows the company's revenue, expenses, and net income over a specific period. It provides information on the company's profitability and performance.
2. Balance Sheet: The balance sheet provides a snapshot of the company's financial position at a specific point in time. It includes assets, liabilities, and shareholders' equity, providing insight into the company's financial health and liquidity.
3. Cash Flow Statement: The cash flow statement shows the cash inflows and outflows of the company during a specific period. It helps to assess the company's ability to generate cash and meet its financial obligations.
4. Statement of Changes in Equity: This statement shows the changes in equity of the company over a specific period, including the contributions from and distributions to shareholders, retained earnings, and other changes affecting equity.

Each of these financial statements plays a crucial role in providing information to investors, creditors, and other stakeholders about the company's financial performance, position, and cash flow. Understanding and analyzing these financial statements are essential for making informed decisions about the company's financial health and prospects.