Chapter 13
How Lenders and Investors Read a Financial Report
In This Chapter
Looking after your investments
Checking out the auditor’s report
Using ratios to interpret profit performance
Using ratios to interpret financial condition
Scanning footnotes and sorting out important ones
Some years ago, a private business needed additional capital to continue its growth. Its stockholders could not come up with all the additional capital the business needed. So they decided to solicit several people to invest money in the company, including me. (In Chapter 8, I explain corporations and the stock shares they issue when owners invest capital in the business.) I studied the business’s most recent financial report. I had an advantage that you can have too if you read this chapter: I know how to read a financial report and what to look for.
After studying the financial report, I concluded that the profit prospects of this business looked promising and that I probably would receive reasonable ...
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