The updated new edition of the comprehensive guide to reading and understanding financial reports
Financial reports are used to provide a range of vital information, including an organization’s cash flow, financial condition, and profit performance (aka The Big Three Financial Statements). Financial statements are often complex and extremely difficult to understand for anyone other than accounting and finance professionals. How to Read a Financial Report enablesinvestors, lenders, business leaders, analysts, and managers to read, analyze, and interpret financial accounting reports. Designed specifically for non-specialists, this reader-friendly resource covers the fundamentals of financial reporting in jargon-free English. Topics such as sales revenue & recognition, costs of goods sold, sources & uses of capital/cash, non-cash expenses (e.g., depreciation expense), income tax obligations, understanding profits & financial stability, and financial statement ratios & analysis are covered throughout the book.
Now in its ninth edition, this bestselling guide has been thoroughly revised to reflect changes in accounting and financial reporting rules, current practices, and recent trends. New and expanded content explains managing cash flow, illustrates the deceitful misrepresentation of profits in some financial reports (aka Financial Engineering), and more. Further, end-of-chapter activities help readers learn the intricacies of the balance sheet and cash flow statement, while updated sections address shifts in regulatory standards. Written by two highly experienced experts in financial accounting, this resource:
- Enables readers to cut through the noise and focus on what financial reports and financial statements are really saying about a company
- Clarifies commonly misunderstood aspects of financial reporting and how companies can “financially engineer” operating results
- Offers comprehensive, step-by-step guidance on analyzing financial reports
- Provides numerous examples and explanations of various types of financial reports and analysis tools
Table of contents
- PREFACE TO THE NINTH EDITION
Part One FUNDAMENTALS
- 1 STARTING WITH CASH FLOWS
- 2 TWO BEDROCK FINANCIAL STATEMENTS
- 3 REPORTING CASH FLOWS
- 4 FITTING TOGETHER FINANCIAL STATEMENTS
Part Two CONNECTIONS
- 5 SALES REVENUE AND ACCOUNTS RECEIVABLE
- 6 COST OF GOODS SOLD EXPENSE AND INVENTORY
- 7 INVENTORY AND ACCOUNTS PAYABLE
- 8 OPERATING EXPENSES AND ACCOUNTS PAYABLE
- 9 OPERATING EXPENSES AND PREPAID EXPENSES
- 10 DEPRECIATION EXPENSE AND PROPERTY, PLANT, AND EQUIPMENT
- 11 ACCRUING LIABILITY FOR UNPAID EXPENSES
- 12 INCOME TAX EXPENSE AND ITS LIABILITY
- 13 NET INCOME AND RETAINED EARNINGS, AND EARNINGS PER SHARE (EPS)
- 14 CASH FLOW FROM OPERATING (PROFIT-SEEKING) ACTIVITIES
- 15 CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES
Part Three USING FINANCIAL STATEMENTS
- 16 FOOTNOTES AND MANAGEMENT DISCUSSIONS
- 17 FINANCIAL STATEMENT RATIOS AND ANALYSIS
- 18 FINANCIAL ENGINEERING
- 19 CPAs AND FINANCIAL REPORTS
20 BASIC QUESTIONS, BASIC ANSWERS
- When You Buy Stock Does the Company Get Your Money?
- Are Financial Reports Reliable?
- Are Some Financial Statements Misleading and Fraudulent?
- Should You Take the Time to Compute Financial Statement Ratios?
- Why Read Financial Statements, Then, If You Won’t Find Information That Has Been Overlooked by Others?
- The Financial Statements and Footnotes of Large Public Companies Would Take Several Hours to Read Carefully: What’s the Alternative?
- Is There a Basic Test to Gauge a Company’s Financial Performance?
- Do Financial Statements Report the Truth, the Whole Truth, and Nothing but the Truth?
- Does Its Financial Report Explain the Basic Profit-Making Strategy or Profit Model of a Business?
- Does the Market Price of a Public Company’s Stock Shares Depend Directly and Only on the Information Reported in Its Financial Statements?
- Does the Balance Sheet of a Private Business Tell the Market Value of the Business?
- Do Books on Investing and Personal Finance Refer to Financial Statements?
- A Very Short Summary
- ABOUT THE AUTHORS
- END USER LICENSE AGREEMENT
- Title: How to Read a Financial Report, 9th Edition
- Release date: February 2020
- Publisher(s): Wiley
- ISBN: 9781119606468
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