Balance sheet provides a comprehensive snapshot of a company's financial health at a specific point in time. It helps stakeholders, including investors, creditors, and management, assess the company's assets, liabilities, and shareholders' equity. This information is crucial for making informed decisions about investing, lending, and managing the company's financial operations. It also aids in evaluating liquidity, solvency, and overall financial stability.
An income statement is a financial document that summarizes a company's revenues, expenses, and profits or losses over a specific period, such as a quarter or a year. It shows how revenues are transformed into net income, providing insights into the company's operational efficiency, profitability, and overall financial performance. Key components include revenues, cost of goods sold, gross profit, operating expenses, operating income, and net income.
A cash flow statement is crucial because it tracks the cash inflows and outflows from operating, investing, and financing activities over a specific period. It reveals a company's liquidity and financial health, highlighting its ability to generate cash to meet obligations, invest in growth, and return capital to shareholders.
