Financial statements or financial reports give us the information/data to make financial decisions such as identifying things to buy, figuring out how to get the money to buy those things, and how to manage them efficiently.

There are three primary financial statements including:

• Balance sheet
• Income statement
• Cash flow statement

Balance sheet

The balance sheet includes information about a company's assets, obligations, liabilities at a point in time (e.g. end of the year).

The assets might include short-term assets such as new products for inventory, new hiring staff; or long-term assets such as property, plant, and equipment (PP&E).

The balance sheet also shows three general sources where the company uses to get the money to buy assets including:

• Borrowing money from somewhere
• Take money from the company owner's private savings
• Take money from the company's profit

Income statement

The income statement shows the company's profit, revenues, and expenses during a particular period such as a month, a quarter, and a year.

Cash flow statement

The cash flow statement or the statement of cash flows shows where the cash came from and how the company spends it during a period.