FINRA Series 86 Research Analyst Practice Exam

The primary financial statements analyzed in investment research are indeed the Income Statement, Balance Sheet, and Cash Flow Statement. Each of these statements serves a distinct purpose, offering a comprehensive view of a company's financial health.

The Income Statement provides critical information about a company's profitability over a specific period. It summarizes revenues, expenses, and profits, allowing analysts to assess how well a company generates profit from its operations.

The Balance Sheet presents a snapshot of a company's financial position at a particular point in time. It shows the company's assets, liabilities, and equity, providing insights into its capital structure and overall financial stability. This is essential for understanding the company's solvency and liquidity.

The Cash Flow Statement tracks the inflow and outflow of cash within the company over a specific period, offering insights into operational efficiency and financial flexibility. It differentiates between cash flows from operating activities, investing activities, and financing activities, which helps analysts understand how the company manages its cash resources.

By analyzing these three statements together, investors and analysts can form a well-rounded view of a company's performance, financial condition, and cash management, enabling informed investment decisions. This combination of statements is standard in investment research, underscoring the interconnectivity of profitability, financial position, and cash management in