It is crucial for any investor to understand how to assess the financial health of a company. Financial statements are the main tool that provides a detailed view of how a company is managing its resources, what its liabilities are and what its profits are. Whether you plan to invest in stocks, bonds or other financial instruments, understanding these statements will help you make informed decisions.

Financial statements form the basis for any analysis of a company's performance. The main statements you will come across regularly are the profit and loss statement, balance sheet and cash flow statement. Each of these statements provides a different view of a company's financial condition and together they form a comprehensive picture of its health.

In this article, and for accurate examples, we'll use McDonald's Financials $MCD 👇

Let's start with the profit and loss statement, which provides a snapshot of how the company earns and what its expenses are for a specific period. This…