Final answer:
The income statement is the financial statement that provides information on a company's financial performance over a year, by reporting its revenues, expenses, and profits.
Step-by-step explanation:
The financial statement that answers the question 'How well did the company perform during the year?' is the income statement. The income statement, sometimes called the profit and loss statement, reports a company's revenues, expenses, and profits over a specific period of time. This statement reflects the company's financial performance by showing whether the company made a profit or incurred a loss during the fiscal year.
As opposed to the balance sheet which shows the company's financial position at a single point in time, the income statement provides insight into the company's operations and efficiency over the entire year. The statement of retained earnings shows the changes in the company's retained earnings, which is the amount of profit that is kept within the company rather than distributed to shareholders in the form of dividends. The statement of cash flows outlines the company's cash inflows and outflows from operating, investing, and financing activities. However, it is the income statement that directly reveals the company's performance through earnings.