Question: What Are Financial Statements And What Do I Need To Know About Them?
Obinna Okoro, Benin City

Answer: Financial statements are reports prepared by the management of a company. They  present the financial performance and position of company, private or public, for a stated period of time. It usually includes a balance sheet, income statements, statement of equity holdings, and statement of cash flows. The statements give investors, creditors and other stakeholders information about the company’s financial positions.

Financial statements serve as financial information for most decision makers. The important financial statements are:

  • Balance Sheet. It shows the financial conditions of your business at a time in It’s trading life.
  • Profit and Loss Statement. It shows whether the company made a profit or less during a trading
  • Cash Flow Statement. It shows the use of cash during a period of time

A clear understanding of each of these statements, and comparing them over different periods of time, enables you to determine what is happening in your business, and what needs to done towards helping the company  to achieve it’s set goals.