How do I analyse the accounts?
Welcome to the world of the amateur detective! You’re now entering the part in the book where you start to understand what the accounts do (and don’t) tell you about a company’s financial performance. Like any good detective, you’ll probably have as many questions as answers, but you should be able to make sense of what is going on. Interpretation starts with understanding – it’s only after you’ve understood the wealth of information you’ll find in the accounts, that you can start to analyse and interpret it.
I’m now going to show you how to do this in a structured way. You’ve already looked at the accounts, and reading through them is the starting point for financial analysis. You’ll now move ...