Financial statement numbers exposed covers the key financial reports released by the Chief Financial Officer (CFO). Investors get performance facts and figures from financial facts and figures lined up in neat and tidy columns of the statements. Each report in the set bares part of company operations. Together all operating details get reported.
How investors track money, lesson 2
The lesson, financial statement numbers exposed, explains the set of financial reports that make up the financial statements. Lessons on each reveal how investors use that financial statement information. This is lesson 1 of the Simply Numbers course. Links at the end guide you to related lessons if you want to learn more.
To understand and get the most from financial statements investors must know and understand the basic numbers. Understanding the financial statements gives us the keys to unlock a treasure trove of investing information. By having an understanding of financial statement basics we gain a valuable skill. With that basic skill, investors can ask companies to, “show me the numbers!”
Financial statements are in-depth reports filled with revealing financial information. They cover all financial aspects of a company. That deep treasure trove of answers reveals the financial picture. Knowing that gives us a deep understanding a company. We benefit by being able to make well founded investment decisions.
A New Investment Tool!
This lesson is from White Top Investor course, Simply Numbers Tracking The Money, these related posts can help introduce novice investors to financial statements. This is a very basic introduction to financial statements.
Understanding financial statements gives you another powerful and useful investment research tool! With a little time and effort on your part, this series can help you get comfortable looking at, reading and understanding financial statements.
The Basic Numbers For Investors
Anyone that reads product labels for nutrition and content information, or follows a recipe, or can find the standing of a favorite sports team, can easily learn about reading financial statements.
No rocket science or brain surgery here, we just need to know how to read the numbers. Then we can pick out the numbers that count.
Understanding those numbers gives us a better understanding of the companies that we hope will bring us to financial security and retirement independence. Or that simply grow our wealth!
Three Investment Questions
We need to know, is our treasure growing or shrinking? Are we more secure or more at risk? What do the numbers say? These three question summarize our interest in investing! The financial statements give us the answers. Later White Top View posts can help you learn what to do about what you learn from the financial statements.
Financial Statement Key Components
1. Balance Sheet
2. Income Statement
3. Cash Flow
In addition to these three financial statements, there are others and much more useful supplemental information available in a set of financial statements. To begin we stay with discussing these basic statements that show us the money. These reports give critical information: where the money comes from, where is it now and where it goes.
Investors Gain From Professional Accounting
Accounting professionals produce financial statements. It takes years of study to learn, understand and practice professional accounting. The field is broad and deep. The work of accountants involves considerably more than just producing financial statements. They make careers of producing financial reports and far more.
You can delve very deeply into the numbers to extract considerably more information than our quick basic overview. My purpose here is to get you comfortable with looking at the numbers. When comfortable, you will understand the value of these documents and how they help you make decisions that can grow your wealth.
Accounting Standards Let Investors Compare Companies
Getting everybody on the same page with the same understanding is one ongoing challenge faced by accountants. As a profession they agree on standards. That means the numbers produced by one accountant are comparable to those produced by all others.
The standards apply nationally. Sensibly, the several accounting professional organizations are working towards universal standards. We are not there yet, but the process is well on the way.
Knowing which standards apply becomes important when considering investments outside your home country. You will want to investigate and know the differences before putting your money in. You also need to know if the standards are the same for companies you wish to compare. However that is well beyond this basic discussion.
Investors Must Get Down To The Numbers
We begin by looking at the numbers. Pick any company in your portfolio or any publicly listed company that interests you. Search the company website for the latest quarterly report. That report will include the current financial statements. Open the financial statements and use them as an example to look at while we take a quick tour that touches on the highlights.
Beginning in the next post in this White Top View blog series, we take a walk through each financial statement.
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Simple Numbers Track Money, lessons:
Introduction to Simply Numbers Tracking The Money Lesson 1
Financial statement numbers exposed Lesson 2
Balance sheet numbers exposed Lesson 3
Income statement bottom lines Lesson 4
Cash flow money goes Lesson 5
Analyzing, analysts and investing numbers Lesson 6
Next lesson 3: Balance sheet numbers balance
Have a prosperous investor day!
Bryan
White Top Investor
[email protected] WhiteTopInvestor.com
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