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How to Read a Financial Report: Wringing Vital Signs Out of the Numbers
Hidden somewhere among all the numbers in a financial report is vitally important information about where a company has been and where it is going. This is especially relevant in light of the current corporate scandals.
The sixth edition of this bestselling book is designed to help anyone who works with financial reports--but has neither the time nor the need for an in-depth knowledge of accounting--cut through the maze of accounting information to find out what those numbers really mean.
The sixth edition of this bestselling book is designed to help anyone who works with financial reports--but has neither the time nor the need for an in-depth knowledge of accounting--cut through the maze of accounting information to find out what those numbers really mean.
192 pages, Paperback
First published January 1, 1980
249 people are currently reading
4510 people want to read
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Displaying 1 - 30 of 60 reviews
January 24, 2017
/********* START OF REVIEW **********/
This book is very useful because the authors helps draw the interrelationships among different item lines in financial statements and shows how they all fit together, or use the author's words "all three financial statements fit together like tongue-in-groove woodwork. The three financial statements interlock with one another."
One such link between balance sheet and income statements is the "Sales Revenue and Accounts Receivable link". From there we can calculate the 'accounts receivable turnover ratio' and subsequently 'average sales credit period' to get a sense of how long, on average, the company allows its customers to pay for its products/services.
/********** END OF REVIEW **********/
Some noteworthy points:
-You might think twice before investing much time in analyzing the financial statements of corporations whose securities are publicly traded—because hundreds of other investors have done the same analysis and the chance of you finding out something that no one else has yet discovered is nil. On the other hand, for a quick benchmark test you might compare the percent change in the company's sale revenue over last year with the percent changes in its net income and operating assets. Major disparities are worth a look.
-In short, the three financial statements revolve around the three financial imperatives of every
business—to make profit, to remain in healthy financial condition, and to make good use of cash flow.
-The amounts reported in the balance sheet are the balances of the accounts at that precise moment in time. The financial condition of the business is frozen for one split second."
-You should keep in mind that the balance sheet does not report the total flows into and out of the assets, liabilities, and owners' equity accounts during a period. Only the ending balances at the moment the balance sheet is prepared are reported for the accounts. For example, the company reports an ending cash balance of $565,807 (see Exhibit B). Can you tell the total cash inflows and outflows for the year? No, not from the balance sheet.
-Just a quick word of advice here: Retained earnings is not—I repeat, is not—an asset. Retained earnings probably is the most misunderstood account in financial statements. Many people,
even some experienced business managers, think this account is an asset or, more specifically, cash. Retained earnings is not an asset and it certainly is not cash. The amount of cash is reported in the cash account in a company's balance sheet ($565,807 in this example).
The retained earnings balance, frankly, has little practical significance. Hypothetically, a business could sell all its assets for their book values, pay all its liabilities, return all capital invested in the business to its stockholders, and distribute a "going out of business" cash dividend equal to its retained earnings balance. To stay in business a company can't do this, of course.
-Comparisons of a company's inventory holding period with those of its competitors and with historical trends provide useful benchmarks.
-Accumulated depreciation is deducted from original cost, and the $2,200,000 remainder is shown. This amount is the portion of original cost that has not yet been depreciated; it is called the book value of fixed assets.
-Speaking of accounts payable, many businesses merge accrued operating expenses with accounts payable and report only one liability in their external balance sheets. Both types of liabilities are non-interest-bearing. The size of accounts payable and accrued expenses have significant impacts on cash flow, which Chapter 13 explains. Any change in the size of these two liabilities has cash flow impacts that are important to the company's managers as well as its creditors and investors.
-Notes payable always are reported separately and not mixed with non-interest-bearing liabilities. Interest is a financial expense as opposed to operating expenses.
-As already mentioned, the business decided it should not allow its working cash balance to drop as low as $340,807 (which would have happened without additional cash from external sources). Relative to more than $10 million annual sales, $340,807 is a rather skinny cash balance to work with. I should point out that there are no general standards or guidelines regarding how large a company's operating cash balance should be. The $340,807 cash balance would equal only 1.7 weeks of the company's sales revenue, which would be viewed as too small, I think, by most business managers. A logical question to ask here is: Why didn't the business forgo cash dividends and keep its working cash balance at a higher level? This is a good question! Probably, its stockholders want a cash dividend on their investments in the business, and the board of directors was under pressure to deliver cash dividends. In any case, the business did pay $200,000 cash dividends, which are reported in the financing activities section in the cash flow statement (Chapter 14 Exhibit).
-Profit does not guarantee liquidity and solvency. The cash flow statement should be read carefully to see if there are any danger signs or red flags.
-The difference between accounting methods has to do with when sales revenue and expenses are recorded. Managers control the timing of discretionary expenses, it is thought, to smooth profit from period to period.
-The profit lookout for the year may be below or above expectations. The look ahead at profit may
indicate a unacceptable swing from last year. In these situations the manager may decide to nudge the profit number up or down, and the best way of doing this is to manipulate discretionary expenses. Or, the manager can control the timing for recording revenues. Sales can be accelerated, for example, by shipping more products to the company's captive dealers even though they didn't order the products. The business is taking away sales from next year to put the sales on the books this year.
-And, they pay a lot of attention to cash flow from profit (operating activities) because this is one number managers cannot manipulate—the business either got the cash flow or it didn't.
-Accounting methods determine profit, but not cash flow. If reported profit is backed up with steady cash flow, stock analysts rate the quality of earnings very high.
-Accelerated depreciation deductions are higher and tax payments are lower in the early years of using fixed assets. Thus, the business has more cash flow available to reinvest in new fixed assets—both to expand capacity and to improve productivity.
-Financial statement users should keep in mind that, with rare exceptions, business fixed assets are overdepreciated—not in the actual wearing out or physical using up sense but in the accounting sense. In balance sheets the reported book values of a company's fixed assets (original cost less accumulated depreciation) are understated. A company's fixed assets are written off too fast. Book values shrink much quicker than they should.
-There's no end to the ratios than can be calculated. The trick is to focus on those ratios that have the most interpretive value. Of course it's not easy to figure out which ratios are the most important. Professional investors tend to use too many ratios rather than too few, in my opinion. But, you never know which ratio might provide a valuable clue to the future market value increase or decrease of a stock.
-Is it worth your time as an individual investor to read carefully through the financial statements
and also to compute ratios and make other interpretations?
I doubt it. The women's investment club was very surprised by this answer, and I don't blame them. The conventional wisdom is that by diligent reading of financial statements you will discover under- or overvalued securities. But, the evidence doesn't support this premise. Market prices reflect all publicly available information about a business, including the information in its latest quarterly and annual financial reports.
If you enjoy reading through financial statements, as I do, fine. It's a valuable learning experience. But don't expect to find out something that the market doesn't already know. It's very unlikely that you will find a nugget of information that has been overlooked by everyone else. Forget it; it's not worth your time as an investor. The same time would be better spent keeping up with current developments reported in the financial press.
-Is there any one basic "litmus test" for a quick test on a company's financial performance?
Yes. I would suggest that you compute the percent increase (or decrease) in sales revenue this year
compared with last year, and use this percent as the baseline for testing changes in bottom-line profit (net income) as well as the major operating assets of the business. Assume sales revenue increased 10% over last year. Did profit increase 10%? Did accounts receivable, inventory, and long-term operating assets increase 10%?
This is no more than a quick-and-dirty method, but it will point out major disparities. For instance,
suppose inventory jumped 50% even though sales revenue increased only 10%. This may signal a major management mistake; the overstock of inventory might lead to write-downs later. Management does not usually comment on such disparities in financial reports. You'll have to find them yourself.
This book is very useful because the authors helps draw the interrelationships among different item lines in financial statements and shows how they all fit together, or use the author's words "all three financial statements fit together like tongue-in-groove woodwork. The three financial statements interlock with one another."
One such link between balance sheet and income statements is the "Sales Revenue and Accounts Receivable link". From there we can calculate the 'accounts receivable turnover ratio' and subsequently 'average sales credit period' to get a sense of how long, on average, the company allows its customers to pay for its products/services.
/********** END OF REVIEW **********/
Some noteworthy points:
-You might think twice before investing much time in analyzing the financial statements of corporations whose securities are publicly traded—because hundreds of other investors have done the same analysis and the chance of you finding out something that no one else has yet discovered is nil. On the other hand, for a quick benchmark test you might compare the percent change in the company's sale revenue over last year with the percent changes in its net income and operating assets. Major disparities are worth a look.
-In short, the three financial statements revolve around the three financial imperatives of every
business—to make profit, to remain in healthy financial condition, and to make good use of cash flow.
-The amounts reported in the balance sheet are the balances of the accounts at that precise moment in time. The financial condition of the business is frozen for one split second."
-You should keep in mind that the balance sheet does not report the total flows into and out of the assets, liabilities, and owners' equity accounts during a period. Only the ending balances at the moment the balance sheet is prepared are reported for the accounts. For example, the company reports an ending cash balance of $565,807 (see Exhibit B). Can you tell the total cash inflows and outflows for the year? No, not from the balance sheet.
-Just a quick word of advice here: Retained earnings is not—I repeat, is not—an asset. Retained earnings probably is the most misunderstood account in financial statements. Many people,
even some experienced business managers, think this account is an asset or, more specifically, cash. Retained earnings is not an asset and it certainly is not cash. The amount of cash is reported in the cash account in a company's balance sheet ($565,807 in this example).
The retained earnings balance, frankly, has little practical significance. Hypothetically, a business could sell all its assets for their book values, pay all its liabilities, return all capital invested in the business to its stockholders, and distribute a "going out of business" cash dividend equal to its retained earnings balance. To stay in business a company can't do this, of course.
-Comparisons of a company's inventory holding period with those of its competitors and with historical trends provide useful benchmarks.
-Accumulated depreciation is deducted from original cost, and the $2,200,000 remainder is shown. This amount is the portion of original cost that has not yet been depreciated; it is called the book value of fixed assets.
-Speaking of accounts payable, many businesses merge accrued operating expenses with accounts payable and report only one liability in their external balance sheets. Both types of liabilities are non-interest-bearing. The size of accounts payable and accrued expenses have significant impacts on cash flow, which Chapter 13 explains. Any change in the size of these two liabilities has cash flow impacts that are important to the company's managers as well as its creditors and investors.
-Notes payable always are reported separately and not mixed with non-interest-bearing liabilities. Interest is a financial expense as opposed to operating expenses.
-As already mentioned, the business decided it should not allow its working cash balance to drop as low as $340,807 (which would have happened without additional cash from external sources). Relative to more than $10 million annual sales, $340,807 is a rather skinny cash balance to work with. I should point out that there are no general standards or guidelines regarding how large a company's operating cash balance should be. The $340,807 cash balance would equal only 1.7 weeks of the company's sales revenue, which would be viewed as too small, I think, by most business managers. A logical question to ask here is: Why didn't the business forgo cash dividends and keep its working cash balance at a higher level? This is a good question! Probably, its stockholders want a cash dividend on their investments in the business, and the board of directors was under pressure to deliver cash dividends. In any case, the business did pay $200,000 cash dividends, which are reported in the financing activities section in the cash flow statement (Chapter 14 Exhibit).
-Profit does not guarantee liquidity and solvency. The cash flow statement should be read carefully to see if there are any danger signs or red flags.
-The difference between accounting methods has to do with when sales revenue and expenses are recorded. Managers control the timing of discretionary expenses, it is thought, to smooth profit from period to period.
-The profit lookout for the year may be below or above expectations. The look ahead at profit may
indicate a unacceptable swing from last year. In these situations the manager may decide to nudge the profit number up or down, and the best way of doing this is to manipulate discretionary expenses. Or, the manager can control the timing for recording revenues. Sales can be accelerated, for example, by shipping more products to the company's captive dealers even though they didn't order the products. The business is taking away sales from next year to put the sales on the books this year.
-And, they pay a lot of attention to cash flow from profit (operating activities) because this is one number managers cannot manipulate—the business either got the cash flow or it didn't.
-Accounting methods determine profit, but not cash flow. If reported profit is backed up with steady cash flow, stock analysts rate the quality of earnings very high.
-Accelerated depreciation deductions are higher and tax payments are lower in the early years of using fixed assets. Thus, the business has more cash flow available to reinvest in new fixed assets—both to expand capacity and to improve productivity.
-Financial statement users should keep in mind that, with rare exceptions, business fixed assets are overdepreciated—not in the actual wearing out or physical using up sense but in the accounting sense. In balance sheets the reported book values of a company's fixed assets (original cost less accumulated depreciation) are understated. A company's fixed assets are written off too fast. Book values shrink much quicker than they should.
-There's no end to the ratios than can be calculated. The trick is to focus on those ratios that have the most interpretive value. Of course it's not easy to figure out which ratios are the most important. Professional investors tend to use too many ratios rather than too few, in my opinion. But, you never know which ratio might provide a valuable clue to the future market value increase or decrease of a stock.
-Is it worth your time as an individual investor to read carefully through the financial statements
and also to compute ratios and make other interpretations?
I doubt it. The women's investment club was very surprised by this answer, and I don't blame them. The conventional wisdom is that by diligent reading of financial statements you will discover under- or overvalued securities. But, the evidence doesn't support this premise. Market prices reflect all publicly available information about a business, including the information in its latest quarterly and annual financial reports.
If you enjoy reading through financial statements, as I do, fine. It's a valuable learning experience. But don't expect to find out something that the market doesn't already know. It's very unlikely that you will find a nugget of information that has been overlooked by everyone else. Forget it; it's not worth your time as an investor. The same time would be better spent keeping up with current developments reported in the financial press.
-Is there any one basic "litmus test" for a quick test on a company's financial performance?
Yes. I would suggest that you compute the percent increase (or decrease) in sales revenue this year
compared with last year, and use this percent as the baseline for testing changes in bottom-line profit (net income) as well as the major operating assets of the business. Assume sales revenue increased 10% over last year. Did profit increase 10%? Did accounts receivable, inventory, and long-term operating assets increase 10%?
This is no more than a quick-and-dirty method, but it will point out major disparities. For instance,
suppose inventory jumped 50% even though sales revenue increased only 10%. This may signal a major management mistake; the overstock of inventory might lead to write-downs later. Management does not usually comment on such disparities in financial reports. You'll have to find them yourself.
May 24, 2018
This book is an absolute gem for people from non-accounting background. This book lays out the intricate details of the connection between the financial statements and brings to light the importance of differentiating the Earnings from the Cash-Flow. Its a must read book for any people starting out into Stock Investments with less accounting acumen.
December 23, 2020
For any business owner or manager, to keep his business up and running, it's very important to manage three aspects: making sure they earn a profit, maintaining assets & liability to an acceptable level, and ensuring that business generates cash flows.
In order to do this, you need to have the ability to read three main financial statements:
Balance Sheet
Income Statement
Cash Flow Statement
This book beautifully teaches you to do just that. Furthermore, the author (being CPA himself), explains how these three statements are interlinked to each other. This part is often neglected by other authors, as it's equally improvement to see how to change Income Statement can change certain things in the Balance Sheet or Cash Flow Statement or vice-versa.
So, this book is for beginners, for someone who has the basics of accounting. But, as someone who has studied Accounts for some years, and has prepared all the three financial statements, I too found some Aha! moments.
In order to do this, you need to have the ability to read three main financial statements:
Balance Sheet
Income Statement
Cash Flow Statement
This book beautifully teaches you to do just that. Furthermore, the author (being CPA himself), explains how these three statements are interlinked to each other. This part is often neglected by other authors, as it's equally improvement to see how to change Income Statement can change certain things in the Balance Sheet or Cash Flow Statement or vice-versa.
So, this book is for beginners, for someone who has the basics of accounting. But, as someone who has studied Accounts for some years, and has prepared all the three financial statements, I too found some Aha! moments.
January 12, 2025
4 Stars - I thought this was a good summary of financial reporting and found it informative.
- Good explanations on things that could trick me up such as recording of prepaid expenses, turnover ratios, connections between accounts, and the functionality of the CF statement.
- The section on EBITDA/Adj. EBITDA was good. I liked how the author mentioned keying in on profit generating cash flow and not vice versa (also still considering EBITDA’s utility in comparative analysis).
- Enjoyed the “Accounting Issues” section in each chapter which gave some good color on where things might potentially fall short or be subject to smoothing/manipulation by management.
- Good explanations on things that could trick me up such as recording of prepaid expenses, turnover ratios, connections between accounts, and the functionality of the CF statement.
- The section on EBITDA/Adj. EBITDA was good. I liked how the author mentioned keying in on profit generating cash flow and not vice versa (also still considering EBITDA’s utility in comparative analysis).
- Enjoyed the “Accounting Issues” section in each chapter which gave some good color on where things might potentially fall short or be subject to smoothing/manipulation by management.
This entire review has been hidden because of spoilers.
September 21, 2021
It was a good read. I had a fear of financial terms and concepts but starting with this book really give me a headstart and also, understood the basic knowledge about financial reports. I got to know about all the 3 statements (Balance Sheet, Income Statement, and Cash Flow Statement) and the relation between them. Clear, wise, and smart thinking is required before making any decisions about investing in public/private companies.
October 11, 2020
A very comprehensive guide on how to read financial statements. The last 20 pages are way too elementary, but overall it is a good revision on some of the key concepts in studying companies. I would recommend this to anyone who are new to accounting.
September 25, 2023
Amazone
Best book about financial statements
10
This is THE book on reading financial statements. If you get this book, you'll never have to read another book about financial statements again.
f429
---
Worth the investment
10
Clear concise and above all helpful. I have struggled with this subject for a long time (I'm 70).
The writers of those books that I previously bought just seemed to make assumptions that I would 'know' about key points (maybe they found the subject tedious) but Tracy & Tracy explain all and with a touch of humour.
field mouse
---
Good for beginners.
8
When you want to squeeze this piece of paper called the balance sheet, don't panic. Just open this book and learn how to read it.
Carolina Perez
---
Best Available Primer on Basic Financial Statements
10
This is the best primer on the basics of financial statements imaginable. It explains them in a clear and logical way for the benefit of anyone who is not an accountant.
Better yet, it shows how they connect with each other and tie together.
Over the years I have bought dozens and dozens of copies of its editions for in-house training of non-financial managers in my companies.
Frederic B. Sargent
---
good book
8
Easy and concise
I like how its gets to the point right away and then goes into further detail later.
Dana
---
Revelation for the beginner. Revision for the intermediate
6
It's a good read. However, I was already acquainted with most of the knowledge being taught.from accounting courses at universities.
The most important lessons I learned are: the interconnections between the financial statements,what negative cash-flow means, how companies can massage their numbers and the meaning of a CPA's opinion. Not bad.
Robert Balaile
---
Great book!
8
Great for those that are starting to connect the dots. This helps to cristalize some concepts, and to take more juice out of the average financial report. I didn’t find the last part of much use, but would have some months ago, and wish I have read it sooner.
So, if you’re not that experienced of a stock picker, and wish to figure things out for yourself instead of relying on the opinions of others, this is of great value.
Cristiano Lopes
---
Not a bad start
8
It makes simple sense. Not the deepest read, but useful all the same.
Pow Wow
---
bridging between beginner and advanced level
8
This book covers the relationship between the accounts in the financial report and touch a little bit on some possible manipulations in the accounts. The explanation given were simple and straightforward.
However, this book may not be suitable for beginners that just learnt about financial report. It is intended for readers who have been familiar with financial reports and wanted to strengthen their concepts. I would recommend this book together with some other books to get the full picture of what is going on.
Andriyanto Halim
---
great book for non-accountants
8
I certainly learnt a lot of new pointers on how to read financials. The book simplified some concepts I struggled with. I found most value in the explanations of how the 3 statements are linked.
Mosa
---
Must read for fundamental analysis and analysing company's health
10
Great and easy readable book explaining financial reports
Income statements - Balance sheets - Cashflow statements
and how are they connected and influence each other to get complete health picture of company.
Great book for basis of fundamental analysis for investors.
Ante
---
Helps Clear the Mystery
10
The book is great for helping one wade through the maze of financial statements. Helps make investment reports more understandable. I have read it twice and is starting round 3. Understanding improves with each revisit.
Tim Bacha
---
Very good book for any non-finance manager
10
Very good book for any non-finance manager. Well structured, easy for understanding and without a lot of 'scientific' non-useful statements.
In my point of view this book should be recommended for all managers who want to have clear understanding of all basic moments of the business they are involved. Thanks a lot, Authors, for the interesting and helpful book!
Val
---
USEFUL
10
Fantastic book, reads like a workbook, so easy to understand. I use these lessons on a weekly basis in my practice of law and also personally when I try to understand macro level news stories.
I give copies as gifts. A classic for a reason.
ssstephanie
---
great book
10
A book of gratest help for non financial managers, and for students.
It marvelously explains and clarifies the concepts of accounting, unveiling links and meanings that are not evident to everybody.
Bought for me, bought again years later for my doughter, suggesting to all the people around me at work.
An absolute masterpiece in its own.
Raffaele Bartoli
---
This book is great!
10
As an accountant I actually learned a couple things .
100% recommended to anyone who wants to learn more about financial statements
Julia Martinez
---
Provides great information
10
Probably one of the best/most helpful books that I have read on understanding financial statements. Great explanations.
wrk
---
Great stuff!
10
I liked how it helped me pass my exam.
Jerseygirlxoxo
---
It is so good to use plain words to explain highly practical accounting problems.
Jian Huang
---
This is absolutely one of the best books there is on the subject.
Debbie Platts
---
Five Stars
Great starter book. Then read Financial Statements by Ittelson.
----
Love
10
Kissy Suzuki
Best book about financial statements
10
This is THE book on reading financial statements. If you get this book, you'll never have to read another book about financial statements again.
f429
---
Worth the investment
10
Clear concise and above all helpful. I have struggled with this subject for a long time (I'm 70).
The writers of those books that I previously bought just seemed to make assumptions that I would 'know' about key points (maybe they found the subject tedious) but Tracy & Tracy explain all and with a touch of humour.
field mouse
---
Good for beginners.
8
When you want to squeeze this piece of paper called the balance sheet, don't panic. Just open this book and learn how to read it.
Carolina Perez
---
Best Available Primer on Basic Financial Statements
10
This is the best primer on the basics of financial statements imaginable. It explains them in a clear and logical way for the benefit of anyone who is not an accountant.
Better yet, it shows how they connect with each other and tie together.
Over the years I have bought dozens and dozens of copies of its editions for in-house training of non-financial managers in my companies.
Frederic B. Sargent
---
good book
8
Easy and concise
I like how its gets to the point right away and then goes into further detail later.
Dana
---
Revelation for the beginner. Revision for the intermediate
6
It's a good read. However, I was already acquainted with most of the knowledge being taught.from accounting courses at universities.
The most important lessons I learned are: the interconnections between the financial statements,what negative cash-flow means, how companies can massage their numbers and the meaning of a CPA's opinion. Not bad.
Robert Balaile
---
Great book!
8
Great for those that are starting to connect the dots. This helps to cristalize some concepts, and to take more juice out of the average financial report. I didn’t find the last part of much use, but would have some months ago, and wish I have read it sooner.
So, if you’re not that experienced of a stock picker, and wish to figure things out for yourself instead of relying on the opinions of others, this is of great value.
Cristiano Lopes
---
Not a bad start
8
It makes simple sense. Not the deepest read, but useful all the same.
Pow Wow
---
bridging between beginner and advanced level
8
This book covers the relationship between the accounts in the financial report and touch a little bit on some possible manipulations in the accounts. The explanation given were simple and straightforward.
However, this book may not be suitable for beginners that just learnt about financial report. It is intended for readers who have been familiar with financial reports and wanted to strengthen their concepts. I would recommend this book together with some other books to get the full picture of what is going on.
Andriyanto Halim
---
great book for non-accountants
8
I certainly learnt a lot of new pointers on how to read financials. The book simplified some concepts I struggled with. I found most value in the explanations of how the 3 statements are linked.
Mosa
---
Must read for fundamental analysis and analysing company's health
10
Great and easy readable book explaining financial reports
Income statements - Balance sheets - Cashflow statements
and how are they connected and influence each other to get complete health picture of company.
Great book for basis of fundamental analysis for investors.
Ante
---
Helps Clear the Mystery
10
The book is great for helping one wade through the maze of financial statements. Helps make investment reports more understandable. I have read it twice and is starting round 3. Understanding improves with each revisit.
Tim Bacha
---
Very good book for any non-finance manager
10
Very good book for any non-finance manager. Well structured, easy for understanding and without a lot of 'scientific' non-useful statements.
In my point of view this book should be recommended for all managers who want to have clear understanding of all basic moments of the business they are involved. Thanks a lot, Authors, for the interesting and helpful book!
Val
---
USEFUL
10
Fantastic book, reads like a workbook, so easy to understand. I use these lessons on a weekly basis in my practice of law and also personally when I try to understand macro level news stories.
I give copies as gifts. A classic for a reason.
ssstephanie
---
great book
10
A book of gratest help for non financial managers, and for students.
It marvelously explains and clarifies the concepts of accounting, unveiling links and meanings that are not evident to everybody.
Bought for me, bought again years later for my doughter, suggesting to all the people around me at work.
An absolute masterpiece in its own.
Raffaele Bartoli
---
This book is great!
10
As an accountant I actually learned a couple things .
100% recommended to anyone who wants to learn more about financial statements
Julia Martinez
---
Provides great information
10
Probably one of the best/most helpful books that I have read on understanding financial statements. Great explanations.
wrk
---
Great stuff!
10
I liked how it helped me pass my exam.
Jerseygirlxoxo
---
It is so good to use plain words to explain highly practical accounting problems.
Jian Huang
---
This is absolutely one of the best books there is on the subject.
Debbie Platts
---
Five Stars
Great starter book. Then read Financial Statements by Ittelson.
----
Love
10
Kissy Suzuki
January 5, 2022
One of the best books out there that gives you the "why" vs. a technical definition. I love the final departing comments from the author - if you are an individual investor, you do not need to read or even understand each line of the financial statement, but you do need to have a good comprehension of it to know what you are getting into...
September 22, 2023
"How to Read a Financial Report: Wringing Vital Signs Out of the Numbers" is a book written by John A. Tracy. This book is a practical guide aimed at helping readers, particularly those without a strong financial background, understand and interpret financial statements and reports.
John Tracy, a respected author and accounting expert, provides clear and accessible explanations of financial statements, including balance sheets, income statements, and cash flow statements. The book is designed to demystify financial reports and enable individuals to make informed decisions based on financial data.
John Tracy, a respected author and accounting expert, provides clear and accessible explanations of financial statements, including balance sheets, income statements, and cash flow statements. The book is designed to demystify financial reports and enable individuals to make informed decisions based on financial data.
August 19, 2024
Ili bro è una risorsa indispensabile per chiunque desideri imparare a interpretare i bilanci aziendali, soprattutto per coloro che non provengono da un background contabile. L'autore, con chiarezza e precisione, spiega come i tre principali rendiconti finanziari (Stato Patrimoniale, Conto Economico e Rendiconto Finanziario) siano strettamente interconnessi e come queste connessioni possano influenzare la comprensione delle performance aziendali. Il libro è particolarmente utile per principianti e investitori individuali che desiderano avere una solida base per prendere decisioni finanziarie informate.
August 19, 2018
I read this book as part of my development goals for the year. I read it and took notes and studied it. The book is like reading a textbook and most of it was review from some of my MBA courses.
I do plan to create a spreadsheet to measure the financial ratios of some companies just for practice after reading this.
If you work in business in a non-accounting or finance role and want to learn more about how companies make profit, pay and control expenses, massage quarterly numbers reported to Wall Street, and accrual based accounting this book is a good starting point.
I do plan to create a spreadsheet to measure the financial ratios of some companies just for practice after reading this.
If you work in business in a non-accounting or finance role and want to learn more about how companies make profit, pay and control expenses, massage quarterly numbers reported to Wall Street, and accrual based accounting this book is a good starting point.
December 25, 2020
This book takes you through entries on financial documents like income statements and cash flow statements to show you how they tie together and what they might mean for a business. The author ends with some broader discussion of accounting and auditing decisions and challenges.
As a guy who eked out a ‘C’ in “Accounting for Non-Majors”, this topic is not one I find particularly interesting however Mr. Tracy does a good job making the discussion relevant and digestible even for people like me.
As a guy who eked out a ‘C’ in “Accounting for Non-Majors”, this topic is not one I find particularly interesting however Mr. Tracy does a good job making the discussion relevant and digestible even for people like me.
August 30, 2023
I just started a new job of Bookkeeping Liaison and this was required reading. It gave me the fundamentals of reading financial reports thar was easy to understand for someone without an accounting background.
I found how they related each report with one another line by line, extremely useful. I would recommend this to anyone who is looking to learn this skill or anyone who is looking to get into the stock market.
I found how they related each report with one another line by line, extremely useful. I would recommend this to anyone who is looking to learn this skill or anyone who is looking to get into the stock market.
June 10, 2019
Strongly recommend this book for any managers/lenders/investors/founders who need to work intimately with financial statements.
Ideally, 75% what's covered in this book should feel like a summary of your existing financial knowledge. If it doesn't then I suggest picking up 'Financial Intelligence: A Manager's Guide for Knowing What the Numbers Actually Mean' as a starting point.
Ideally, 75% what's covered in this book should feel like a summary of your existing financial knowledge. If it doesn't then I suggest picking up 'Financial Intelligence: A Manager's Guide for Knowing What the Numbers Actually Mean' as a starting point.
June 20, 2020
An introduction to financial statements: how to read them, ratios, pitfalls, common practices. That's a good starting point for those who need such knowledge (managers, entrepreneurs...).
As the book was written for US readers (US accounting practices and regulations), you'll obviously have to find additional material elsewhere if you are in another country.
As the book was written for US readers (US accounting practices and regulations), you'll obviously have to find additional material elsewhere if you are in another country.
October 17, 2018
Not as difficult to read as I thought. In fact, it was quite readable. A good intro to financial statements. Plus, you can request a spreadsheet from the author to see how changes in performance are connected in the three financial statements.
January 20, 2019
I had know knowledge on financial terms and how to read financial reports before reading this. Easy understandable terminology and challenging. Anyone can start reading this. For sure I will reread this book every year.
November 20, 2022
There are better books out there, explaining the terms simpler than this book. However, this book brings a new perspective.
The only annoying thing was that you always had to go 3-4 pages back to understand the examples and to check the numbers. That gets too annoying after some time.
The only annoying thing was that you always had to go 3-4 pages back to understand the examples and to check the numbers. That gets too annoying after some time.
August 4, 2023
Read in tandem (not audio) with GGOB and it also connects to Fin Intel by Karen Berman. Very clear primer (8th edition) that was written in 2014 after the 2008 crisis. I will be going back to this one.
July 16, 2024
Very clear and concise. It’s unique in that it discusses at length the relationship between the three main financial statements, as opposed to each statement in isolation. It would be nice to have an ‘advanced’ version.
March 11, 2017
This book saved my life in Financial Reporting!! The text book was not computing, and this spoke my language (and had helpful visuals!).
April 20, 2018
Super helpful and well written book
May 12, 2018
A Good Read. But it's not Updated enough.
February 26, 2019
The first two parts were good. The last part was too dry.
August 30, 2019
Really great book. Easy to understand. Contacted the author, John Tracy, with a few questions, and he actually replied! How awesome is that?!
September 19, 2019
A great point of entry for those who are just starting. It is easy to read and it opens you doors to search further.
September 27, 2019
Must read
May 26, 2020
Solid. Preferred the second half to the first - worth powering through.
Read
November 12, 2020Didn't actually make it to the end. Well written, but couldn't sustain enough interest before library loan period was up.
October 17, 2021
This book does exactly what it says. A great reference to have around for any individual investor who isn't a CPA.
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