How to Read a Financial Report, 8th Edition

How to Read a Financial Report: Wringing Vital Signs Out of the Numbers

An updated new edition of the comprehensive guide to reading and understanding financial reports

Financial reports provide vital information to investors, lenders, and managers. Yet, the financial statements in a financial report seem to be written in a foreign language that only accountants can understand. This new Eighth Edition of How to Read a Financial Report breaks through that language barrier, clears away the fog, and offers a plain-English user’s guide to financial reports. This updated edition features new information on the move toward separate financial and accounting reporting standards for private companies, the emergence of websites offering financial information, pending changes in the auditor’s report language and what this means to investors, and requirements for XBRL tagging in reporting to the SEC, among other topics.

• Makes it easy to understand what financial reports really say
• Updated to include the latest information financial reporting standards and regulatory changes
• Written by an author team with a combined 50-plus years of experience in financial accounting

With this new edition of How to Read a Financial Report, investors will find everything they need to fully understand the profit, cash flow, and financial condition of any business.

Table of Contents

Part One: Fundamentals
Chapter 1: Starting with Cash Flows
Chapter 2: Three Financial Statements
Chapter 3: Profit Accounting
Chapter 4: Profit Isn’t Everything

Part Two: Connections
Chapter 5: Sales Revenue and Accounts Receivable
Chapter 6: Cost of Goods Sold Expense and Inventory
Chapter 7: Inventory and Accounts Payable
Chapter 8: Operating Expenses and Accounts Payable
Chapter 9: Operating Expenses and Prepaid Expenses
Chapter 10: Depreciation Expense and Property, Plant, and Equipment; Intangible Assets
Chapter 11: Accruing the Liability for Unpaid Expenses
Chapter 12: Income Tax Expense and Its Liability
Chapter 13: Net Income and Retained Earnings; Earnings per Share (EPS)

Part Three: Cash Flow
Chapter 14: Cash Flow from Operating (Profit-Making) Activities
Chapter 15: Cash Flows from Investing and Financing Activities
Chapter 16: Growth and Decline Impacts on Cash Flow

Part Four: Analysis
Chapter 17: Footnotes to Financial Statements
Chapter 18: Financial Statement Ratios
Chapter 19: Profit Analysis for Business Managers

Part Five: Truthfulness
Chapter 20: Choosing Accounting Methods and Massaging the Numbers
Chapter 21: Audits of Financial Reports
Chapter 22: Basic Questions, Basic Answers
Chapter 23: Small Business Financial Reporting