In accordance with the IASB’s Conceptual Framework, the objective of general-purpose

financial reporting is to provide financial information about the entity that is useful to investors,

lenders, and other creditors in making decisions about providing resources to the entity. The

general purpose financial reports provide information about the financial position of a reporting

entity, which is information about the entity’s economic resources and the claims against the

reporting entity. Financial reports also provide information about the effects of transactions and

other events that change a reporting entity’s economic resources and claims. Both types of

information provide useful input for decisions about providing resources to an entity.

Information about the nature and amounts of a reporting entity’s economic resources and

claims can help users to identify the reporting entity’s financial strengths and weaknesses. That

formation can help users to assess the reporting entity’s liquidity and solvency, its needs for

additional financing, and how successful it is likely to be in obtaining that financing. Information

about priorities and payment requirements of existing claims helps users to predict how future

cash flows will be distributed among those with a claim against the

reporting entity.

The complete set of financial statements which comprises a statement of financial

position, a statement of profit or loss and other comprehensive income, a statement of changes in

equity and a statement of cash flows are the four primary financial statements that will assist the

potential investor. In essence, the financial statements offer an overview of the state of a

company's finances at a specific period and offer information on its operations, profitability, cash

flow, and general health. As well as the amount of capital or stock that has been put into the

company over time.

 These will enable a comparison of each year's financial statements in the pertinent

financial statements if you ask for the financial statements for the previous three years. This can

be used to forecast the company's future financial worth and provide a ballpark figure for

determining whether the company is worth investing in.