Synopses & Reviews
The U.S. government began standardizing and regulating financial reporting in 1929 when the stock market crash made it painfully clear that businesses often made absurd claims and that investors were either gullible, unable to verify information, or both. Now, financial reports are used by a company’s management to measure profitability (or lack of it), optimize operations and guide the company, by banks and other lenders to gauge the company’s financial health, and by institutional or individual investors interested in purchasing stock.
Unless you’re financially savvy, annual reports with all those figures, frustrating footnotes, and fine print are boring and intimidating. However, once you have a fundamental knowledge of finance and its basic terminology, you can find the juicy parts. Reading Financial Reports For Dummies by Lita Epstein, a teacher of online financial courses and author of Trading for Dummies, gets you up to speed so you can:
- Go past the prose that can maximize the positive and minimize the negative and get information in dollars and cents
- Get an overview from the big three—the balance sheet, income statement, and statement of cash flows
- Understand the lingo and read between the lines
- Calculate basics like PE, Dividend Payout Ratio, ROS, ROA, ROE, Operating Margin, and Net Margin
It pays for investors to be somewhat skeptical instead of gullible. Pressured to please Wall Street, companies are sometimes tempted to use “creative” accounting. You’ll discover how to:
- Detect red flags (that, unfortunately, aren’t emphasized in red) such as lawsuits, changes in accounting methods, and obligations to retirees and future retirees
- Understand the different reporting requirements for public companies and private companies with various types of business structures
- Analyze a company’s cash flow, a prime indicator of its financial health
- Scrutinize deals such as mergers, acquisitions, liquidations and other major changes in key assets
Organized so you can start where you’re comfortable and proceed at your own pace, Reading Financial Reports for Dummies helps managers prepare annual reports and use financial reporting to budget more efficiently and helps investors base their decisions on knowledge instead of hype. Whether you’re in business or in the stock market, knowledge is always an asset.
The ins and outs of financial reports, explained in plain English
Want to make sense of financial reports? This easy-to-follow guide gives you a set of tools to understand these complicated statements, helping you read between the lines to determine a company's true financial health. You'll make informed decisions about investing, spot possible problems, and use these reports to manage your own department or company for success.
Get down to reporting basics recognize different business types and how their structure affects the books, and grasp the accounting method underlying it all
Analyze the annual report make sense of the balance sheet, income and cash flow statements, and the notes while spotting red flags
Know your numbers keep an eye on whether a company is making a profit or suffering a loss
Understand how companies optimize operations use reports to measure how efficiently management is using its resources
Meet the financial watchdogs from auditors to analysts, see who certifies report accuracy and how recent scandals have changed the rules
Practice makes perfect put your skills to the test by dissecting the annual reports of two similar companies throughout the book
Open the book and find:
The accounting basics necessary to understand financial reports
New information on reporting standards for private/small versus public/large businesses
Updates surrounding the 2007 law on international financial reporting standards
The impact of corporate communications and new technologies
New real-world examples that reflect current trends
Updated Web sites and resources
Tips for spotting the fluff in financial reports
Simple strategies for measuring a company's financial health
Decipher the jargon and read financial reports like a pro
Whether you're a serious investor or hold a few shares in the company you work for, reading financial reports is a vital way to keep tabs on a company's performance. This clear and friendly guide will help you wade through the numbers to see what's really going on so you can make smarter and more profitable investment choices.
Discover how to:
- Make sense of balance sheets
- Find the figures that tell the tale
- Test the numbers with simple formulas
- Recognize red flags in the footnotes
- Understand deceptive accounting practices
The second edition includes over 25 percent new and updated information including:
- New information on the separate accounting and financial reporting standards for private/small businesses versus public/large businesses
- Updated information that reflects the 2007 law on international financial reporting standards
- New content to match SEC and other governmental regulatory changes over the past three years
- New information about how the analyst-corporate connection has actually changed the playing field
- The impact of corporate communications and new technologies
- New examples that reflectthe current trends
- Updated websites and resources
About the Author
Lita Epstein, MBA,is a seasoned financial writer who focuses on helping people understand the complex worlds of money and finance. She was a financial manager for a medical clinic and content director for a financial services Web site, MostChoice.com. She also writes for AOL's Blogging Stocks and WalletPop.
Table of Contents
Part I: Getting Down to Financial Reporting Basics.
Chapter 1: Opening the Cornucopia of Reports.
Chapter 2: Recognizing Different Business Types.
Chapter 3: How Company Structure Affects the Books.
Chapter 4: Digging Into Accounting Basics.
Part II: Checking Out the Big Show: Annual Reports.
Chapter 5: Exploring the Anatomy of an Annual Report.
Chapter 6: Balancing Assets against Liabilities and Equity.
Chapter 7: Using the Income Statement.
Chapter 8: The Statement of Cash Flows.
Chapter 9: Scouring the Notes to the Financial Statements.
Chapter 10: Considering Consolidated Financial Statements.
Part III: Analyzing the Numbers.
Chapter 11: Testing the Profits and Market Value.
Chapter 12: Looking at Liquidity.
Chapter 13: Making Sure the Company Has Cash to Carry On.
Part IV: Understanding How Companies Optimize Operations.
Chapter 14: Using Basic Budgeting.
Chapter 15: Turning Up Clues in Turnover and Assets.
Chapter 16: Examining Cash Inflow and Outflow.
Chapter 17: How Companies Keep the Cash Flowing.
Part V: The Many Ways Companies Answer to Others.
Chapter 18: Finding Out How Companies Find Errors: The Auditing Process.
Chapter 19: Digging Into Government Regulations.
Chapter 20: Checking Out the Analyst-Corporation Connection.
Chapter 21: How Companies Soothe the Shareholders.
Chapter 22: Keeping Score When Companies Play Games with Numbers.
Part VI: The Part of Tens.
Chapter 23: Ten Financial Scandals That Rocked the World.
Chapter 24: Ten Signs That a Company’s in Trouble.
Chapter 25: Ten Top-Notch Online Resources.
Part VII: Appendixes.
Appendix A: Financial Statements.
Appendix B: Glossary.