How to Read and Understand Financial Statements

The Beginner's Guide to Reading and Understanding Financial Statements

Financial statements are the report card of business. Whether you are a new investor, a small business owner, an executive, 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 of your finances. Financial statements will tell you how much money there is, how much debt is owed, the income coming in each month, and the expenses going out the door. This guide to financial statements will teach you how to do all of that. 

01
The Annual Report

Financial Statements in the Annual Report

Many of the financial statements you need to understand a company are contained in its 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 ...

02
10K and the Financial Statements

10K and the Financial Statements

The 10K is a special collection of financial statements that a company is required to file with the Securities and Exchange Commission. It usually includes much more information 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 ...

03
The Balance Sheet - How to Read and Analyze the Balance Sheet

Balance Sheet Financial Statements

The balance sheet 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 37 pages, it's like a free college textbook designed completely for new investors that have no background in finance. Learn to read and understand the balance sheet ...

04
The Income Statement - How to Read & Analyze the Income Statement

Income Statement - Understanding Financial Statements

Sometimes called the profit and loss (P&L) statement, 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. 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 ...

05
Using the Financial Statements to Calculate Financial Ratios

Guide to Financial Ratios on the Financial Statements

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 ...

06
One Trick Management Can Use to Artificially Inflate Financial Statement Profits

General Ledger Financial Statements

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...

07
5 Ways a Company Can Lie On Its Financial Statements

Cook the Books

There are five things a company can do to screw with the numbers on its financial statement in an effort to make the 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 ...