To properly analyze financial information, it is important to look at both the financial statements and ratios. Financial statements are used to show the financial performance of a company over a specific period, while financial ratios are used to compare the performance of different companies or the same company over different periods.
The main financial statements are the income statement, balance sheet, and cash flow statement. The income statement shows a company's revenues, expenses, and net income or loss over a specific period. The balance sheet shows a company's assets, liabilities, and equity at a specific point in time. The cash flow statement shows a company's cash inflows and outflows over a specific period.