A qualitative characteristic of financial information that is provided in financial statements and financial reporting by an entity. It refers to the state by which this information relates to the context in which an entity operates, and as such can be particularly useful to users, in a manner that improves the outcome of their decision-making about a specific economic event or phenomenon.

Relevant information, therefore, can make a difference in users’ decisions (e.g., the difference between informed and uninformed decisions). Based on the ability of users to select between one option and another, the difference may be a better investment, a well-calculated market timing, a higher return, etc.