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Reading Financial Reports For Dummies, 3rd Edition

by Lita Epstein

December 2018

Beginner

384 pages

10h 9m

English

For Dummies

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About This BookConventions Used in This BookWhat You're Not to ReadFoolish AssumptionsIcons Used in This BookBeyond the BookWhere to Go from Here
Figuring Out Financial ReportingChecking Out Types of ReportingDissecting the Annual Report to Shareholders
Flying Solo: Sole ProprietorshipsJoining Forces: PartnershipsSeeking Protection with Limited Liability CompaniesShielding Your Assets: S and C Corporations
Investigating Private CompaniesUnderstanding Public CompaniesEntering a Whole New World: How a Company Goes from Private to Public
Making Sense of Accounting MethodsUnderstanding Debits and CreditsChecking Out the Chart of AccountsDifferentiating Profit Types
Everything but the NumbersPresenting the Financial PictureSummarizing the Financial Data
Understanding the Balance EquationIntroducing the Balance SheetOgling AssetsLooking at LiabilitiesNavigating the Equity Maze

Introducing the Income StatementDelving into the Tricky Business of RevenuesAcknowledging ExpensesSorting Out the Profit and Loss TypesCalculating Earnings per Share
Digging into the Statement of Cash FlowsChecking Out Operating ActivitiesInvestigating Investing ActivitiesUnderstanding Financing ActivitiesRecognizing the Special Line ItemsAdding It All Up
Deciphering the Small PrintAccounting Policies Note: Laying out the Rules of the RoadFiguring out Financial Borrowings and Other CommitmentsMergers and Acquisitions: Finding Noteworthy InformationPondering Pension and Retirement BenefitsBreaking Down Business BreakdownsReviewing Significant EventsFinding the Red Flags
Getting a Grip on ConsolidationLooking at Methods of Buying up CompaniesReading Consolidated Financial StatementsLooking to the Notes
The Price/Earnings RatioThe Dividend Payout RatioReturn on SalesReturn on AssetsReturn on EquityThe Big Three: Margins
Finding the Current RatioDetermining the Quick RatioInvestigating the Interest Coverage RatioComparing Debt to Shareholders’ EquityDetermining Debt-to-Capital Ratio
Measuring Income SuccessChecking Out DebtCalculating Cash Flow Coverage
Peering into the Budgeting ProcessBuilding BudgetsProviding Monthly Budget ReportsUsing Internal Reports
Exploring Inventory Valuation MethodsApplying Three Inventory Valuation MethodsDetermining Inventory TurnoverInvestigating Fixed Assets TurnoverTracking Total Asset Turnover
Assessing Accounts Receivable TurnoverTaking a Close Look at Customer AccountsFinding the Accounts Payable RatioDetermining the Number of Days in Accounts PayableDeciding Whether Discount Offers Make Good Financial Sense
Slowing Bill PaymentsSpeeding Up Collecting Accounts ReceivablesBorrowing on ReceivablesReducing InventoryGetting Cash More Quickly
Inspecting Audits and AuditorsExamining Records: The Role of the AuditorFilling the GAAP
Checking Out the 10-QIntroducing the 10-KInvestigating Internal ControlsUncovering the Ways Companies Keep in ComplianceDigging into Board OperationsFinding Out about Insider Ownership
Why Develop a Worldwide Financial Standard?Key Moves to Reshape Global Financial ReportingWho Benefits from a Global Standard and How?Key Differences between GAAP and the IFRS
Typecasting the AnalystsRegarding Bond-Rating AgenciesDelving into Stock RatingTaking a Look at How Companies Talk to Analysts
Making the Most of MeetingsChecking Out How the Board Runs the CompanySorting through ReportsCatching Up on Corporate ActionsCulling Information from Analyst CallsStaying Up-to-Date Using Company WebsitesRegarding Reinvestment Plans
Getting to the Bottom of Creative AccountingUnearthing the Games Played with EarningsExploring Exploitations of ExpensesFinding Funny Business in Assets and LiabilitiesPlaying Detective with Cash Flow
EnronMadoffCitigroupAdelphiaWorldCom/MCISunbeamTycoWaste ManagementBristol-Meyers SquibbHalliburtonArthur Andersen
Lower LiquidityLow Cash FlowDisappearing Profit MarginsRevenue Game PlayingToo Much DebtUnrealistic Values for Assets and LiabilitiesA Change in Accounting MethodsQuestionable Mergers and AcquisitionsSlow Inventory TurnoverSlow-Paying Customers

Content preview from Reading Financial Reports For Dummies, 3rd Edition

Chapter 9

Scouring the Notes to the Financial Statements

IN THIS CHAPTER

Describing the notes and their importance

Understanding the fine print of accounting methods

Finding out about financial commitments

Getting acquainted with mergers and acquisitions

Reading notes about pensions and retirement

Detailing segmented businesses and significant events

Keeping an eye out for red flags

Would you ever sign an important contract without reading the fine print first? I didn't think so. Remember this philosophy when you read financial statements because the corporate world certainly doesn't escape the cliché about sweeping ashes under the rug. Hiding problems in the notes to the financial statements is a common practice for companies in trouble.

In this chapter, I explain the role of the ...

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Publisher Resources

ISBN: 9781119543954Purchase book