Reading financial reports

M

mr_byte31

I became interested in reading financial reports for companies.
I would like to deeply understand how they work (Balance sheets, income statement, cash flow)

I would like also to understand what will happen to balance sheet of a company when it acquire another company and how it will be affect.

I went through youtube but all videos are just giving term definitions and rough information. Nothing concrete.

I am asking if there is a good resource (video , book, .. ) that explain the financial report in more details ?

I would expect something like that shall exist in finance courses.
 
Was on my to do list myself. I would think some basic accounting courses be the best and smartest approach.

Then again I’ve always wondered where any benefit might come from. Your information is quarterly, and seems theirs always a way to fudge the numbers, Enron being a perfect example.

Than again I do enjoy learning a little bit of all aspects of the stock market whether it’s market micro structure, economics, accounting, quantative analysis, etc .
 
No. But I would avoid anything involving trading and fundamantal analysis as your guaranteed to find mostly talking bobble heads.

Just my opinion.
 
mr_byte31 said:
I became interested in reading financial reports for companies.
I would like to deeply understand how they work (Balance sheets, income statement, cash flow)

I would like also to understand what will happen to balance sheet of a company when it acquire another company and how it will be affect.

I went through youtube but all videos are just giving term definitions and rough information. Nothing concrete.

I am asking if there is a good resource (video , book, .. ) that explain the financial report in more details ?

I would expect something like that shall exist in finance courses.
More...


Text books in Financial Statement Analysis are pretty good.

I'm currently reading a book called "Valuations" that was put out by McKinsey. Its 800 pages and pretty involved.

Security analysis is a proper discipline that takes years to master. This is why so many traders trade "price action." It doesn't require the same rigor of study and practice.
 
I'll pass along the best lesson I ever got from an experienced accountant about reading financial reports: companies can declare an annual loss 2 out of every 5 years.

A loss means no tax, my good friend!
 
Last edited:
kmiklas said:
I'll pass along the best lesson I ever got from an experienced accountant about reading financial reports: companies can declare an annual loss 2 out of every 5 years.
More...

I don't quite understand what you wrote. What do you mean by "can"? Do you mean they deliberately and regularly declare annual losses 2 years out of every 5 years to reduce their tax bill? What point are you trying to make? Genuine question.
 
timothylee said:
I don't quite understand what you wrote. What do you mean by "can"? Do you mean they deliberately and regularly declare annual losses 2 years out of every 5 years to reduce their tax bill? What point are you trying to make? Genuine question.
More...
A company is taxed on their profits. If they declare a loss their tax burden is significantly decreased... and may be zero. That's why you see stories like below; where a multi-billion dollar company like General Electric paid no taxes at all in 2010.

The law states that a company can only declare a loss 2 out out five years. So imagine a scenario where a company has declared a profit the last three years. They can save a boatload of money simply by declaring a loss this year. Good accountants will structure tax returns over a number of years to maximize write-offs.

This, in turn, affects the share price, as declared quarterly earnings will be down this year. It has little to do with actual revenue, PnL, unit sales, etc.. it's all creative accounting designed to minimize tax burden.

Any kind of fundamental analysis ABSOLUTELY MUST include an investigation into a company's tax structure. It's on the short list of drivers for company valuation.

https://abcnews.go.com/Politics/general-electric-paid-federal-taxes-2010/story?id=13224558
 
You must log in or register to reply here.
Back
Top