Financial Statement refers to a structured record of a companyís financial performance, position, and cash flows over a specific period. These statements are essential tools for investors, analysts, regulators, and management to assess the companyís profitability, liquidity, solvency, and overall financial health. In simple terms, financial statements reveal how a business earns revenue, spends money, and manages its assets and liabilities.

There are three key types of financial statements:

• Income Statement: Also known as the Profit and Loss Statement, it shows a companyís revenues, expenses, and profits or losses over a period. It helps in evaluating the firmís operational performance and profitability.
• Balance Sheet: This statement presents a snapshot of a companyís financial position at a given date. It lists assets, liabilities, and shareholdersí equity, providing insights into how a company finances its operations and manages its resources.
• Cash Flow Statement: It tracks the inflow and outflow of cash and cash equivalents during a period. It is divided into operating, investing, and financing activities, helping assess a companyís liquidity and cash management efficiency.

Investors often analyze these statements together to gain a comprehensive understanding of a companyís financial stability. For instance, while the income statement shows profitability, the balance sheet highlights leverage and liquidity, and the cash flow statement confirms actual cash generation capability.

In India, companies must prepare and publish financial statements as per Indian Accounting Standards (Ind AS) and the Companies Act, 2013. Listed companies are also required to comply with disclosure norms laid down by the Securities and Exchange Board of India (SEBI).

In essence, financial statements serve as a transparent communication tool between a company and its stakeholders, enabling informed decision-making, financial comparison, and regulatory compliance.