What is the main goal of financial statements?

The main goal of financial statements is to provide a clear picture of financial performance. Financial statements, which include the income statement, balance sheet, and cash flow statement, serve as a comprehensive report of a company's financial health over a specific period. They communicate essential information to various stakeholders, such as investors, creditors, and management, allowing them to assess the company’s profitability, financial stability, and liquidity. By summarizing key financial data, these statements enable users to make informed decisions regarding investments, credit, and operational strategies.

While summarizing operational performance is part of the function of financial statements, it is not their main goal, as the overarching aim is to depict overall financial performance. Tracking employee performance and establishing market trends do not fall under the primary objectives of financial statements. Instead, those areas are typically managed through other methods such as performance reviews and market research.