What is the primary purpose of financial audits?

The primary purpose of financial audits is to ensure that financial statements are free from material misstatement. This means that the auditor examines the financial statements and underlying records of a company to verify their accuracy and compliance with applicable accounting standards and regulations. The goal is to provide reasonable assurance to stakeholders, such as investors, creditors, and regulators, that the financial statements present a true and fair view of the company's financial position and performance.

A financial audit involves a systematic review of financial records, internal controls, and accounting practices to detect any errors or fraud that could mislead users of the financial statements. By ensuring the integrity of financial reporting, audits enhance the credibility and reliability of the information presented to stakeholders.

The other options, while they may relate to aspects of business evaluation or operational performance, do not encompass the core purpose of financial audits, which is centered on the accuracy and reliability of financial statements.