In what way do financial statements assist investors?

Financial statements play a crucial role in assisting investors by providing a detailed evaluation of a company's financial performance. These documents—such as the income statement, balance sheet, and cash flow statement—offer insights into various aspects of a company's operations, including its profitability, liquidity, and overall financial health. Investors analyze these statements to understand how well the company is generating revenue, managing expenses, and utilizing assets to create value.

By evaluating financial performance, investors can make informed decisions regarding buying, holding, or selling their shares in the company. They can assess trends over time, compare the company's performance with industry peers, and determine the sustainability of its operations. This data-driven approach enables investors to gauge potential risks and rewards associated with their investment, ultimately guiding them in their financial strategies.

Other options, while they may provide some utility, do not directly enhance an investor's understanding of a company's financial viability or inform investment decisions like the evaluation of financial performance does.