How to Read a Financial Report: Wringing Vital Signs Out of the Numbers / Edition 6by John A. Tracy
Pub. Date: 02/20/2004
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 Fourth Edition 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. In this edition an entirely new and carefully designed exhibit is used to visually illustrate the connecting links among the three key statements in a financial report (the balance sheet, the income statement and the cash flow statement). This center-piece exhibit--used throughout the text--includes a two-year comparative balance sheet to explain the cash flow statement much more effectively. Also features a new chapter on the making and changing of financial reporting rules and updated information on new legislation.
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Table of Contents
1. Starting with Cash Flows.
2. Introducing the Balance Sheet and Income Statement.
3. Profit Isn’t Everything.
4. Sales Revenue and Accounts Receivable.
5. Cost of Goods Sold Expense and Inventory.
6. Inventory and Accounts Payable.
7. Operating Expenses and Accounts Payable.
8. Operating Expenses and Prepaid Expenses.
9. Long-Term Operating Assets: Depreciation and Amortization Expense.
10. Accruing Unpaid Operating Expenses and Interest Expense.
11. Income Tax Expense and Income Tax Payable.
12. Net Income and Retained Earnings; Earnings per Share (EPS).
13. Cash Flow from Profit and Loss.
14. Cash Flows from Investing and Financing Activities.
15. Growth, Decline, and Cash Flow.
16. Footnotes—The Fine Print in Financial Reports.
17. CPAs, Audits, and Audit Failures.
18. Choosing Accounting Methods and Quality of Earnings.
19. Making and Changing Accounting Standards.
20. Cost of Goods Sold Conundrum.
21. Depreciation Dilemmas.
22. Ratios for Creditors and Investors.
23. A Look Inside Management Accounting.
24. A Few Parting Comments.
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Most Helpful Customer Reviews
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Taking the time to learn the basics of reading corporate financial statements can help you become more informed about your investments, your job and your business decisions. John A. Tracy provides a clearly written guide to core financial reports. He shows you how they fit together and why they matter. You will gain confidence as you work through the concepts he explains and begin to use what you learn to dig into the financials of familiar companies. In the hands of a lesser teacher than Tracy, these concepts could be confusing. In fact, the whole discussion could become a powerful soporific that descends on your mind like a fog. Instead, this book makes it interesting and clear. Everyone needs some financial awareness. getAbstract believes that this valuable introduction is a good starting point for learning to read real business data. New managers may find that Tracy opens a door and invites you to come into a room that was previously locked.
I used this book as a text for a short course on understanding financial statements for an investment club. The material was well received and as we discussed the topics I think everyone left with a better understanding of the numbers and what they mean. The book is not complicated it is an easy read and explains basic concepts very well. I highly recommend it.