https://www.bookstime.com/ statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.

Unrealized Gains/lossesUnrealized Gains or Losses refer to the increase or decrease respectively in the paper value of the company’s different assets, even when these assets are not yet sold. Once the assets are sold, the company realizes the gains or losses resulting from such disposal. Treasury shares are the total of all the common shares that have been purchased back by the company. Relates to the cash inflows and outflows related to investments in the company like buying property, plants, and equipment or other investments.

Equity

Another concern is that Financial statements statements are entirely historical in nature, and so can be misleading when used to project the future results of a business. For example, a business that relies on government contracts might report robust results for its most recent period, and yet have no additional sales on tap, since it just completed all of the contracts that it had been awarded. The balance sheet provides an overview of a company’s assets, liabilities, and shareholders’ equity as a snapshot in time. The date at the top of the balance sheet tells you when the snapshot was taken, which is generally the end of the reporting period.

These cash flows are divided into cash flows from operating activities, investing activities, and financing activities. The investing activities section contains cash flows from the purchase or sale of investment instruments, assets, or other businesses. The financing activities section contains cash flows related to the acquisition or paydown of debt, dividend issuances, stock sales, and so forth.

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In the United States, especially in the post-Enron era there has been substantial concern about the accuracy of financial statements. Corporate officers—the chief executive officer and chief financial officer —are personally responsible for fair financial reporting that provides an accurate sense of the organization to those reading the report. Financial statement analysis is the process of analyzing a company’s financial statements for decision-making purposes. Last, financial statements are only as reliable as the information being fed into the reports.

International companies may use a similar but different set of rules called International Financial Reporting Standards . Financial statements are also read by comparing the results to competitors or other industry participants. By comparing financial statements to other companies, analysts can get a better sense on which companies are performing the best and which are lagging the rest of the industry.