Reading financial statements
Plain-English guides with worked examples: how to read financial statements, value a business, use technical indicators and manage risk. See the complete Financial knowledge series →
All 142Market basics 15Trading and market structure 15Reading financial statements 15Ratios and business quality 15Valuation 15Advanced valuation and methods 15Technical analysis 15Portfolio, risk and behaviour 15Economy, sectors and the calendar 22
Reading financial statements · 5 min read
How to read an income statement line by line
Learn what each line of an income statement means, from revenue down to earnings per share, and how to spot trends and o...
Reading financial statements · 5 min read
How to read a balance sheet: assets, liabilities and equity
Understand the balance sheet's three parts, assets, liabilities and equity, and learn which lines to check for liquidity...
Reading financial statements · 5 min read
How to read a cash flow statement
See how the cash flow statement splits cash into operating, investing and financing activities, and how to tell a health...
Reading financial statements · 5 min read
Revenue and revenue recognition: when a sale counts
Learn how companies decide when a sale becomes revenue, the five-step model behind it, and which warning signs suggest r...
Reading financial statements · 5 min read
Gross, operating and net margin explained
Learn how gross, operating and net margins are calculated, what each reveals about a company's costs, and why comparison...
Reading financial statements · 5 min read
EBIT vs EBITDA: what each shows and what EBITDA hides
EBIT and EBITDA both measure operating profit, but EBITDA ignores the cost of using up assets. Learn the formulas, the v...
Reading financial statements · 5 min read
Earnings per share: basic vs diluted
Learn how basic and diluted earnings per share are calculated, how options and convertibles change the share count, and...
Reading financial statements · 5 min read
Free cash flow explained and why investors prize it
Free cash flow is the cash a business generates after paying to keep and grow its assets. Learn the formula, the variati...
Reading financial statements · 5 min read
Operating cash flow vs net income: spotting the gap
Net income and operating cash flow often differ. Learn why the gap appears, which causes are harmless, and which persist...
Reading financial statements · 5 min read
Capital expenditure (capex): maintenance vs growth spending
Capex is the money a company spends on long-lived assets. Learn where to find it, how maintenance and growth spending di...
Reading financial statements · 5 min read
Working capital explained: inventory, receivables and payables
Working capital is the cash tied up in day-to-day operations. Learn how receivables, inventory and payables work, and wh...
Reading financial statements · 5 min read
Depreciation and amortization: non-cash charges that matter
Depreciation and amortization spread the cost of long-lived assets over time. Learn how they work, why they are non-cash...
Reading financial statements · 5 min read
Goodwill and intangible assets: what is really on the balance sheet
Goodwill and intangibles often make up a big part of assets after acquisitions. Learn how they are created, tested for i...
Reading financial statements · 5 min read
Deferred revenue: cash received before the work is done
Deferred revenue is a liability for money collected before a product or service is delivered. Learn how it turns into re...
Reading financial statements · 5 min read
Stock-based compensation and share dilution
Paying employees in stock is an expense with no cash outflow, and it can dilute owners. Learn how to measure it and judg...
Educational only, not financial advice.