What are financial statements?

Financial statements are a reflection of the loyalty of a company. They are part of a document or report that compiles precise data on the accounting of a company. Within the definition of the financial statements we also have to take into account that the stipulated period of time to calculate them is developed annually.

In addition, if we want to know what the financial statements are for, we must understand that the final objective is to provide a true picture of the viability and proper functioning of the company. All this information will be of interest to the administrators, shareholders or owners.

What are the financial statements of a company

The classification of the financial statements of a company comprises four differentiated sections. Knowing this, we understand that the result of the financial statements will help us to assess and diagnose the state of the company, the impact of the market or the influence of legislation. Thus, there are 5 most common financial statements of the company and that will be calculated based on the needs of each situation:

  1. Situation balance: to evaluate the assets of the company
  2. La Profit and loss account: to know the evolution line between expenses and income
  3. La accounting memory: to review and complete the accounting of the two previous sections
  4. HeCash Flow: to calculate changes in capital and its movements
  5. The evolution of the net worth
  6. Control of expenses

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