Also known as: financial statements · financials · FS
Written by attorneys · grounded in primary & secondary sources — see below
A document that summarizes an entity's financial condition on a specified date or for a specified period by reporting assets, liabilities, and related data through balance sheets, income statements, or annual reports.
Falcon Dynamics prepares annual financial statements each fiscal year. The corporation retains those statements and any accompanying audit reports for its most recent three fiscal years. When a shareholder later demands inspection, the maintained records allow the company to comply without delay.
Fidelity Trust hires an accounting firm to audit its 2022 financial statements before a planned stock offering. Several investors review the clean audit opinion attached to those statements and purchase shares. When the statements later prove inaccurate, the investors sue the auditors for their role in preparing the reports.
Select any source to read its text and confirm it supports the definition.
Floyd Franklin seeks to assign his commercial lease to Fisher Foods. The proposed assignee submits a financial statement showing stronger assets and net worth than the current tenant. The landlord reviews the statement to decide whether to consent to the assignment under the lease terms.
A religious organization submits its annual financial statements as part of state registration requirements. The state demands additional filings because the group receives less than half its support from members. The organization challenges the filing rule as an unconstitutional burden on religion.
UOP directors receive a fairness opinion from Lehman Brothers that relies on the company's audited financial statements and market data. Minority shareholders later claim the merger price was unfair. The court examines whether the directors properly considered the financial statements in approving the transaction.
Arthur Andersen serves as auditor for a client whose financial performance declines sharply. The firm directs employees to follow document retention policies that affect work papers tied to the client's financial statements. Prosecutors later charge the firm with obstructing an official proceeding based on those instructions.
A corporation must maintain all annual financial statements prepared for it covering its last three fiscal years, along with any related audit or other reports.
Supporting sources
Accounting records must be kept in a form that permits preparation of the corporation's financial statements.
Supporting sources
Directors may base a determination that a distribution is not prohibited on financial statements prepared using accounting practices and principles reasonable in the circumstances.
Supporting sources
A director without knowledge making reliance unwarranted may rely on financial statements and other financial data prepared or presented by officers, employees, or outside professionals.
Supporting sources
…including its annual reports and its Securities and Exchange Commission filings from 1973 through 1976 as well as its audited financial statements for 1977, its interim reports to shareholders, and its recent and historical market prices and trading volumes. In addition, on Friday, March 3, 1978, two members of the Lehman Brothers…