Definition: Summary reports that show the current financial position of a company. It also shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders.

See Also: Profit & Loss Statement, balance sheet , cash flow statement .

Tips: The three basic financial statements are the (1) balance sheet, which shows firm's assets, liabilities, and net worth on a stated date; (2) income statement (also called profit & loss account), which shows how the net income of the firm is arrived at over a stated period, and (3) cash flow statement, which shows the inflows and outflows of cash caused by the firm's activities during a stated period. Also called business financials. Financial statements are also loosely used to refer to the Profit & Loss or income statement.