premise: The first problem with financial statements is that they are in the past; however detailed, they just provide a snap shot of the business at one moment in time. There is also a lack of detail in financial statements, giving little use for the running of a business. Financial statements are provided for legal reasons to meet with accounting regulations and are used largely by city analysts who compute share prices and give advice 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 these standards.
hypothesis: Companies create financial statements as part of their legal obligations.