Financial statements are formal records that provide an overview of a company's financial performance and position. They typically include three main documents: the income statement, which shows revenues and expenses; the balance sheet, which outlines assets, liabilities, and equity; and the cash flow statement, which tracks the flow of cash in and out of the business. These statements help stakeholders, such as investors and creditors, assess the company's profitability and financial health. Understanding financial statements is crucial for making informed business decisions. They offer valuable insights into how well a company is managing its resources and can indicate trends over time. By analyzing these documents, individuals and organizations can evaluate potential investments, monitor financial stability, and plan for future growth.