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(Block, Hirt, 2004) Financial statements are prepared to show the economic health of a firm. The three basic types of financial statements are used to translate income, cash flow, and debt to owners, investors, shareholders, stockholders, bondholders, stakeholders, and creditors. Each of these audiences lends strength to the firm's structure, based upon their role. The income statement is the first type that measures profitability over a specific period of time. Next, the balance sheet shows what the firm owns, its financial liabilities, and ownership interest. Finally, the statement of cash flow show available money into the firm's operations...
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