A financial statement is a formal record that outlines the financial activities and position of a business, organization, or individual. It typically includes key documents such as the balance sheet, income statement, and cash flow statement. These documents provide insights into assets, liabilities, revenues, and expenses, helping stakeholders understand the financial health of the entity. Financial statements are essential for various purposes, including investment analysis, credit evaluation, and regulatory compliance. They are often prepared according to specific accounting standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), ensuring consistency and transparency in financial reporting.