Financial statements are formal records that convey the financial activities and conditions of a business or entity. They provide a summary of financial performance over a specific period, typically including the balance sheet, income statement, and cash flow statement. The balance sheet showcases assets, liabilities, and equity, offering a snapshot of financial position. The income statement details revenue and expenses, revealing profitability. The cash flow statement tracks cash inflows and outflows, highlighting liquidity. Together, these statements offer a comprehensive financial overview, aiding in decision-making and strategic planning.