Financial statements are a set of reports that provide a snapshot of a company's financial health 🏥

Companies typically release them as part of their earnings reports every quarter.

There’s 3 main questions you would ask a company to evaluate its financial health.

1️⃣ How much money does it make?

The point of a business is to make money, so it’s crucial to understand how much money it makes over time 💰

2️⃣ How much stuff does it own, and how much money does it owe others?

Companies can own lots of stuff, like buildings or inventory, and they can also owe a lot of money by taking out loans.

3️⃣ How exactly does it earn and spend its money?

Money doesn’t just show up out of nowhere, so you want to find out how it makes its money, and what it uses it on.

These 3 questions are perfectly answered with the 3 main financial statements that companies release to the public.

1️⃣ Income Statements detail a company's revenues, expenses and profits over time 📊

2️⃣ Balance Sheets summarize what a company owns (assets), and owes (liabilities) over time 🏦

3️⃣ Cash Flow Statements show how cash moves in and out of a company, offering a clear view of how it earns and spends its money 🌊

Next, we’ll dive deeper into each of these statements to show you how to use them to become a better investor!