premise: The first problem with financial statements is that they are in the past; however detailed, they provide just a snap-shot of the business at one moment in time. There is also a lack of detail in financial statements, giving little use in the running of a business. Financial statements are provided for legal reasons to meet with accounting regulations and are used mainly by City analysts who compute share prices and give guidance to shareholders. Accounts often have hidden information and may also be inconsistent; it is difficult to compare different companies accounts, despite there being standards, as there is much leeway in the standards.
hypothesis: Financial statements are useful for businesses to understand their financial activities.