Financial statements Financial statements (or financial reports) are formal records of a business' financial activities. Financial statements provide an overview of a business' financial condition in both short and long term. All the relevant financial information of a business enterprise presented in a structured manner and in a form easy to understand, is called the financial statements. A sound understanding of financial statements helps us to: • Identify damaging tendencies and tendencies throughout organization’s functions (for case in point, the actual unhealthy backlog associated with inventory or reports receivable) prior to circumstance turns into vital. • Monitor profit requirements using a well-timed groundwork, and identify funding desires early. • Monitor significant signs associated with personal wellness (for case in point, liquidity ratios, efficiency ratios, earnings ratios, and solvency ratios).