What is financial reporting?

Statement of shareholder equity
Shareholders' equity typically appears on the balance sheet, however, larger corporations may document these activities on separate statements. The statement of shareholder equity serves this purpose and includes the amounts key stakeholders and owners invest in a company. These investments include company stocks and securities, which pay out dividends at certain periods. Additional items on a statement of shareholder equity that companies generally review include:

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  Common and preferred stock sales and repurchases
  
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  Purchased treasury stock, minus any reissued treasuries during the reporting period
  
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  Retained earnings after subtracting dividends and losses
  
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  Accumulated income, including incomes from unrealized capital gains, minus capital losses
  

Related: What Is a Statement of Equity?
Who uses financial reports?
Financial reporting is an integral process across almost all industries. Businesses and corporations depend on analysis and review of financial documents to make decisions and gain financial backing. Financial institutions also rely on financial documentation to monitor compliance, issue credit and assess profitability and performance. Consider several groups and professionals who use financial reports:

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  Investors, shareholders and creditors: Investors and shareholders have ownership of company stock and review financial reports to assess how companies generate profit. Creditors also use data from financial reports to understand how well companies pay off debts and invest credit to generate business growth.
  
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  Executive managers: Executive directors and teams use financial reporting systems to review performance and revise documentation. Financial reporting also supports executive decision-making, which companies use to establish goals and departmental objectives.
  
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