What is Financial Statement?

Financial Statements are formal, structured reports that summarize a company's financial activities and position. They are prepared based on accounting standards and are used by management, investors, and lenders to make economic decisions. The three core financial statements are the Income Statement (P&L), the Balance Sheet, and the Cash Flow Statement.

For Startups: Accurate and timely financial statements are non-negotiable for any startup seeking funding. They are the primary documents reviewed during investor due diligence and provide the basis for the company's valuation. They tell the financial story of the startup, from its profitability and assets to its cash flow.

Example: At the end of each quarter, a startup's accountant prepares a set of financial statements for the board of directors to review the company's performance against its budget.