Guidance
Director information hub: Financial statements
What is a financial statement and why should directors maintain them?
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Financial statements
As it sounds, a financial statement is a statement or record of the financial position of your company.
The information in your financial statements should include:
- your balance sheet, which is your overall financial position
- profit and loss account, which details your income and expenditure
Balance sheet
Your balance sheet is snapshot of what your company’s financial position is at any given time. Your balance sheet shows:
- company assets
- company liabilities
- shareholders equity
Profit and loss (income)
This statement details the amount of money your company has earned over a 12-month period as well as the money you’ve spent in that time
Cashflow
Your cashflow is the money coming in and out of the business day-to-day.
A positive cashflow is an indicator that your company is in a healthy state.