{text:bookmark-start} Financial Statements {text:bookmark-end} Financial Statements according to Oxford Online Dictionary are Annual statements summarizing a company’s activity over the last year. They consist of the profit and loss account, balance sheet, statement of total recognized gains and losses and, if required, the cash flow statement together with supporting notes. Proper financial statements are crucial for a company’s success. Bad financial management can quickly lead to a company’s downfall. Income statements, also known as P&L’s or profit and losses are a basic account of the company’s profits, expenses and sales. These reports will give insight into the finances of a company in the immediate and distant future. Balance sheets are the assets, liabilities and the equity of a company. This sheet is simply the statement of a company’s financial position. The balance sheet does not apply to the future only to the present point in time. Retained earnings statements are forms that show the balance of initial earnings, any changes that took place and the resulting balance of that. Lastly, when discussing financial statements comes’ the cash flow statement. This is simply a statement that contains information about a company’s cash flow for the short term. This statement will break down all investing, financial and operations activity. Company’s use all of these statements to determine current financial profitability and potential future growth. Without accurate financial statements, and owners and managers abilityto correctly understand them, any company is doomed. A company will use the information on financial statements to keep track of things like assets. Assets are any items of value owned by the company that can be changed over to cash. Comparative statements are another useful tool in the financial management of a company. While comparative statements are not for the present or future, what they do is help compare items from one time...