A BIS working paper4 succinctly states the purpose of accounting statements: “First, information about any firm – be it a financial or non-financial firm – should concern three characteristics, namely: estimates of its current financial condition and profitability; estimates of its risk profile; and a measure of the uncertainty surrounding those two types of estimate”.
While the accounting statements undoubtedly present estimates of the current financial conditions, the extent to which they have been successful in estimating the risk profile of firms is open for debate.