Can financial statements be used to know if a company is performing well or not?

Yes, the financial statements of a company should be a key part of any due diligence when looking at company performance, investment, or M&A.

The bare financial statements (income statement and balance sheet) themselves can be quite opaque and difficult to interpret, particularly with differences in standards between industries (despite the best efforts of International Financial Reporting Standards). But large companies will surround the financial statements will a much wider annual report of financial communication, as well as regular investment communications for shareholders.

Other useful information for company performance includes analyst reports from investment banks (although these can be surprisingly inaccurate in their conclusions), financial projections for future revenue and growth, as well as a wider view of the industry, competition and technology trends.

But the financial statements are a good place to start.