Knowing where you are isn't very helpful if you don't know where you're going, and you can't tell where you came from. That's why every time a business owner is shown a profit & loss report and a balance sheet, they should show the trend of periods leading up to the current one.
Financial statements should either 1) validate the business owner's expectations about what he/she thought the numbers would say about this period, or 2) surprise and inform the business owner about the operations of the business through the numbers.
In either situation, the context... the expectations of "what should I have expected each of these numbers to be?" is the key comparison to actual performance.
If a company spent $2,000 on office supplies this month, is that good or bad? It depends, right? The manager of the business would want to know:
- What did we expect we would spend?
- What do we typically spend on office supplies in a month?
- Are we growing or shrinking our spending on this expense over time?
Providing a profit & loss to the CEO that shows that we historically spend $1,000 - $1,500/mo on office supplies over the past year will be viewed very differently from one that shows we're averaging $3,000 - $5,000/mo, when the current month column shows that we spent $2,000 last period.
Providing all financial statements in the context of history significantly improves an understanding of the financial health of the business. Extra gold stars if the company creates a financial "plan" (a budget or forecast), and then provides a profit & loss statement that compares actual performance to plan on each line item.