Financial statements are a vital part of evaluating a company’s financial health. These statements summarize and report on a company’s financial activity, providing key information about their financial position. They not only help investors and creditors decide whether or not to put their money in the company, but also enable the company itself to identify and plan for areas of financial strength and weakness. The first type of financial statement is the income statement, also known as the profit and loss statement. This statement outlines a company’s revenues, costs, and expenses over a period of time, and shows what the net income or loss was during that period. It is important to note that the income statement only presents information that has been earned or spent during the specified time frame, not what the company will earn or spend in the future. The second type of financial statement is the balance sheet, which outlines a company’s assets, liabilities, and equity. The balance sheet is a snapshot of the company’s financial health at a single point in time. It is important for understanding the company’s debt structure, as well as how much liquid assets the company has. Overall, financial statements provide a wealth of key information about a company’s financial performance and condition. They provide a window into the company’s profitability, debt management, and liquidity, helping investors, creditors, and the company itself make informed decisions about their future.