Final answer:
The financial report of all large companies must include a balance sheet, income statement, statement of cash flows, and the statement of shareholders' equity. These reports give insight into the company's financial status and operations and are especially critical for large U.S. firms followed by investors and regulated by agencies like the FTC.
Step-by-step explanation:
The financial report of all large companies is required to contain several key components to provide a clear view of the company's financial health and operations. These include components like the balance sheet, income statement, statement of cash flows, and the statement of shareholders' equity. The balance sheet provides a snapshot of the company's assets, liabilities, and shareholders' equity at a specific point in time. The income statement reflects the company's financial performance over a period, showing revenue, expenses, and profit or loss. The statement of cash flows indicates the inflows and outflows of cash caused by operational, investing, and financing activities. Lastly, the statement of shareholders' equity shows changes in the ownership interest.
For large U.S. firms, such as those included in Standard & Poor's 500 index, which represents the economy as a whole, these financial statements are critical for investors, regulators, and the market to assess the company's value and stability. Additionally, when companies have a certain level of sales, which was $101 million in 2022, or meet other specific conditions, they are legally obligated to inform regulatory bodies like the U.S. Federal Trade Commission (FTC) about major transactions such as mergers and acquisitions.