A financial report is a document that provides an overview of a company's financial position and

performance. It typically includes balance sheets, income statements, and statements of cash

flow, and may also include statements of shareholder equity and notes to the financial

statements. Financial reports are used by a variety of stakeholders, including shareholders,

creditors, and regulatory agencies, to assess the financial health and stability of a company.

The balance sheet, also known as the statement of financial position, provides a snapshot of a

company's assets, liabilities, and shareholder equity at a specific point in time. It is structured in

such a way that the total value of a company's assets equals the sum of its liabilities and

shareholder equity. Assets are resources owned by the company that have monetary value, such

as cash, investments, and property. Liabilities are obligations that the company owes to others,

such as loans and accounts payable. Shareholder equity represents the residual interest in the

assets of the company after liabilities have been paid off. It includes items such as common

stock, retained earnings, and treasury stock.

The income statement, also known as the statement of operations, shows a company's revenues

and expenses over a specific period of time, such as a fiscal year. It is used to calculate net

income, which is the amount of profit or loss that a company has made over the period.

Revenues are the total amount of money that a company earns from its business activities, such

as sales of goods or services. Expenses are the costs incurred in the process of generating

revenues, such as cost of goods sold, marketing expenses, and general and administrative

expenses. The difference between revenues and expenses is net income, which is either positive

(profit) or negative (loss).

The statement of cash flow shows the flow of cash in and out of a company over a specific

period of time. It is divided into three main sections: cash flows from operating activities, cash
flows from investing activities, and cash flows from financing activities. Operating activities

include cash inflows and outflows related to the company's core business operations, such as

collecting customer payments and paying suppliers. Investing activities include cash inflows and

outflows related to the company's investments in long-term assets, such as buying and selling

property, plant, and equipment. Financing activities include cash inflows and outflows related to

the company's financing arrangements, such as borrowing money or issuing stock.

The statement of shareholder equity shows changes in the ownership interest in a company over

a specific period of time. It includes items such as common stock, preferred stock, retained

earnings, and treasury stock. Common stock represents the ownership interest of common

shareholders in a company, while preferred stock represents the ownership interest of preferred

shareholders. Retained earnings are the accumulated profits of a company that have not been

distributed to shareholders as dividends. Treasury stock is company-owned stock that has been

repurchased by the company.

Notes to the financial statements provide additional information and clarification on the items

reported in the financial statements. They may include details on the company's accounting

policies, significant transactions, and contingent liabilities.

Financial reports are prepared according to generally accepted accounting principles (GAAP),

which are a set of standards and guidelines for financial reporting. They are intended to ensure

that financial reports are consistent, transparent, and reliable, so that stakeholders can make

informed decisions based on them. Financial reports are also subject to audit by independent

certified public accountants (CPAs), who review the financial statements and provide an opinion

on whether they are presented fairly in accordance with GAAP.

In addition to the traditional financial statements, companies may also prepare supplementary

financial information, such as pro forma financial statements and management's discussion and

analysis (MD&A). Pro forma financial statements present financial