Formal records of a business's financial activities, comprising the Balance Sheet, Profit & Loss Statement, Cash Flow Statement, and Notes to Accounts.
Financial Statements provide a structured summary of a company's financial position, performance, and cash flows. The four primary components are: (1) Balance Sheet — snapshot of assets, liabilities, and equity at a point in time; (2) Statement of Profit & Loss — income and expenses over a period; (3) Cash Flow Statement — cash inflows and outflows from operating, investing, and financing activities; (4) Notes to Accounts — detailed disclosures and accounting policies. Under the Companies Act 2013, all Indian companies must prepare financial statements per Schedule III in Ind AS or Indian GAAP format. They must be audited by a qualified CA, approved by the board, and filed with the ROC. Financial statements are used by investors, lenders, tax authorities, and regulators for decision-making.
ABC Ltd Annual Financial Statements (FY 2025-26): Balance Sheet — Total Assets: ₹15 crore, Liabilities: ₹8 crore, Equity: ₹7 crore. P&L — Revenue: ₹25 crore, Expenses: ₹22 crore, Net Profit: ₹3 crore. Cash Flow — Operating: +₹4 crore, Investing: −₹2 crore, Financing: −₹1 crore, Net: +₹1 crore.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
All companies registered under the Companies Act 2013 (private and public). LLPs under the LLP Act. Sole proprietorships and partnerships are required if their turnover exceeds tax audit thresholds (₹1 crore general, ₹10 crore if 95%+ digital transactions). Charitable trusts and societies have separate requirements.
Companies must hold their AGM within 6 months of financial year-end (September 30 for March year-end), and file with ROC within 30 days of AGM in form AOC-4. Late filing attracts penalties of ₹100/day per form.
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
A financial statement that summarizes a company's revenues, costs, and expenses over a specific period to show net profit or loss.
The net amount of cash and cash equivalents moving into and out of a business during a specific period.
An independent evaluation conducted within a company to assess and improve the effectiveness of risk management, internal controls, and governance processes.
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