From Wikipedia, the free encyclopedia.
In the modern capitalist system, most governments require publicly-traded companies to issue a set of documents each year called financial statements or financial reports. This set most often consists of the "balance sheet", the "income statement", the "statement of retained earnings", and the "statement of cash flows", in addition to supplementary notes and management discussion. In the United States, publicly-traded companies are required to prepare based on generally accepted accounting principles.
Each statement presents financial data relating to a company's current financial health, business results for the previous period, and other indicators that are used by prospective investors to consider purchasing the company's stock.
To entice new investors, most American companies assemble their financial statements on fine paper with pleasing graphics and photos, attempting to capture the excitement and culture of the organization in a "marketing brochure" of sorts.
Financial statements must be carefully inspected and certified by independent auditors to avoid misleading information and fraudulent financial presentation, as required by law.
More information on the role of financial statements in business can be found at corporate finance, accounting, and auditing.
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