Everything You Need to Know About Financial Statements

Financial statements are the report card of business. Whether you are a new investor, a small business owner, a manager, an executive, a non-profit director, or just trying to keep track of your personal finances, you need to understand how to read, analyze, and create financial statements so you can get a full and accurate understanding how much money there is, how much debt is owed, the income coming in each moth, and the expenses going out the door. This guide to financial statements will teach you how to do all of that. They are comprehensive and it may take you a week to get through them. Good luck!

Many of the financial statements you need to understand a company are contained in the annual report. This will give you an overview of the annual report, how you can request one for a potential stock, and why you need to get your hands on it if you plan on analyzing financial statements. Get familiar with the annual report and learn how to order one for free ... More

The 10K is a special collection of financial statements that a company is required to file with the Securities and Exchange Commission. It includes much more information, in many cases, than the annual report. This article will teach you how to request a 10K or find them online, why they are important, and the information you're likely to find in it. Discover the secrets buried in the 10K document ... More

Of the three important financial statements, the balance sheet is the one that provides a snapshot in time of what is owned (assets), what is owed (liabilities), and what is left over (net worth or book value). This step-by-step guide to the balance sheet will walk you through each line, explain what everything means, and show you some things to look for when reading financial statements. Spanning over thirty-seven pages, it's like a free college text book designed completely for new investors that have no background in finance. Learn to read and understand the balance sheet ... More

The second of the three financial statements is the income statement. Sometimes called the profit and loss, the income statement shows you money coming in the door (revenue), money going out the door (expenses), and what's left over afterward (income, or profit). The income statement is important because you can use it, along with the balance sheet, to calculate the return you are earning on your investment, whether it's an apartment building you own, a small business you run, or a potential stock you are considering buying or selling. If you are serious about learning financial statements and how financial statement analysis works, you need to read this 42-page step-by-step guide to the income statement ... More

The main reason to learn how to read financial statements is so that you can calculate financial ratios. Financial ratios let you know how a company is doing, how profitable it is, whether management is taking on too much debt, potential problems investors could face down the road, and much more. Starting learning to calculate financial ratios ... More

Sometimes, you need to look beyond the financial statements to understand what is really going on and the dangerous threatening your investments. Imagine, for a moment, that you are looking at the financial statements of a horse and buggy manufacturer in the early 20th century. No matter how cheap the business appeared, you wouldn't want to buy shares because the automobile was going to soon decimate the entire industry. This article will show you some of the key considerations you need to keep in mind when reading financial statements so you don't get lulled into a false sense of comfort. Here are some things to consider ... More

Did you know that by manipulating one key number in a company's financial statements, management could make profits look better than they really are? I found an actual example of this in a publicly traded company and wanted to show you so you could spot it for yourself in the future. Take a look at the financial statements for yourself... More

If you read an annual report and you see something called "Pro Forma" reports, you should stop, take a moment, and seriously consider whether or not you can trust management. Pro forma means that the financial statements do not comply with the GAAP rules. Sometimes, pro forma financial statements can be good (Berkshire Hathaway is a prime example). Other times, it is outright deception, like the telecommunication stocks back in the late 1990's. Here's how you can tell the difference ...

There are five things a company can do to screw with the numbers on its financial statements in an effort to make business look better than it is. By knowing what they are, you have a better chance of protecting yourself from bad investments. Here's the list of the techniques used against you ... More

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