The primary purpose of financial statements is to?

The primary purpose of financial statements is to provide inputs for decision making. Financial statements, which include the income statement, balance sheet, and cash flow statement, present an organized summary of a company’s financial performance and position over a specific period. These documents offer essential information about revenues, expenses, assets, liabilities, and cash flows, which are critical for stakeholders such as management, investors, creditors, and regulators.

Decision makers rely on this information to assess the company’s profitability, liquidity, and overall financial health. For example, management uses financial statements to evaluate operational efficiency and to guide strategic planning. Investors examine these reports to determine the viability and risk of investing in the business. Additionally, creditors assess a company's financial stability before extending credit to ensure their loans are secure.

While summarizing profits, attracting investors, and calculating tax liabilities are all important facets of a company's financial activities, these functions serve as secondary outcomes or applications of the comprehensive data provided in the financial statements. The core objective remains to offer useful financial insights that facilitate informed decision-making processes across various stakeholders.