Final answer:
The three main types of financial reports include the balance sheet, income statement, and cash flow statement, which provide crucial information on a company's financial position, profitability, and liquidity, respectively.
Step-by-step explanation:
The three main types of financial reports are the balance sheet, the income statement, and the cash flow statement.
The balance sheet provides a snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity. It's essential for assessing the net worth of a business.
The income statement, also known as the profit and loss statement, outlines the company's revenues, expenses, and net income over a period. This report is vital for understanding the company's profitability.
The cash flow statement shows the actual cash generated and used during a specific period. It is crucial for understanding the liquidity and cash management of the business.
Investors particularly need to understand these reports to assess the financial health of a company and to make informed investment decisions.