Financial statements are comprehensive documents that summarize the financial performance, position, and cash flows of an organization for a specific period. They include the balance sheet, which provides a snapshot of the company’s assets, liabilities, and equity at a particular point in time; the income statement, which outlines the revenue, expenses, and profit or loss for the period; and the cash flow statement, which details cash inflows and outflows from operational, investing, and financing activities. Additionally, financial statements may include a statement of changes in equity and accompanying notes that provide further context and disclosures.\n\nThese statements are vital for various purposes, such as assessing the financial health of a business, guiding investment decisions, and ensuring compliance with reporting standards like GAAP or IFRS. For instance, an investor examining a company's income statement might evaluate profitability trends to decide whether to invest. Similarly, internal management uses financial statements to analyze performance and strategize accordingly. Financial statements facilitate transparency and accountability in financial reporting, which is crucial for both internal and external stakeholders.