The key financial statements that summarize important quantitative information about a company are as follows:
- The Balance Sheet
- The Income Statement
- The Statement of Cash flows
- The Statement of Retained Earnings
What makes these financial statements important is the fact that they give investors and financial institutions a better understanding of the company’s financial history rather than word of mouth.
However the downside of only looking at these financial statements is that they don’t provide investors with qualitative information about the business in question.
N.B Qualitative information in the context of investors refers to how a business is being managed. Investors are more interested in a firm with good management and the process of acquiring that qualitative information involves accessing the performance of upper management as to whether they are performing at a high standard or under performing.
