Financial statements are an essential component of a business. They provide a detailed picture of the company’s financial health and performance over a given period of time. The most common financial statements are the balance sheet, income statement, statement of retained earnings, and statement of cash flows. These documents assist investors, creditors, and other stakeholders in evaluating a business’s performance and determining its ability to meet current and future obligations. A thorough understanding of these documents helps investors make informed decisions regarding potential investments, while also helping businesses view their finances objectively and take proactive steps towards meeting their fiscal goals.