What Is The Definition of Financial statements in Finance?

Financial statements are reports issued by a company that describe the financial activities of the company.

The financial statements are broken down into three different statements:

• Income Statement - shows the income and expenditure of the company, including things such as depreciation, income tax, interest income etc.
• Balance Sheet - shows the assets, liabilities and shareholders equity of a firm; it must always balance (i.e. assets = liabilities + shareholders equity).
• Cash Flow Statement - shows the inflows and outflows of cash and shows whether the firm is actually making or losing money.