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Financial Statements Explained

A financial statement is a report that provides information about the financial position and performance of a business. There are several different types of financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.

The balance sheet provides information about a company’s assets, liabilities, and equity. It shows the company’s financial position at a specific point in time, and helps to understand the company’s ability to pay its debts and meet its financial obligations.

The income statement shows a company’s revenues, expenses, and net income over a specific period of time, usually a year. It helps to understand the company’s profitability and how well it is managing its expenses.

The statement of cash flows shows the company’s inflows and outflows of cash over a specific period of time. It helps to understand the company’s ability to generate cash and how it is using that cash.

The statement of changes in equity shows the changes in the company’s equity over a specific period of time, including any contributions from shareholders and any net income or loss.

Your banker may be asking for a copy of your financial statements for a number of reasons. They may need them to assess your financial position and determine whether you are a good candidate for a loan or other financial product. They may also use them to monitor your financial performance over time and ensure that you are able to meet your financial obligations. Financial statements can also be useful for investors and analysts, who may use them to make decisions about whether to invest in a company.

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