READOS / Business
Reading Financial Statements
The income statement, balance sheet and cash flow statement, read the way an owner or lender reads them.
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- 01Reading an income statement like an ownerA plain-English walk down the income statement, line by line, asking at each step what an owner would want to know about the strength of the business.
- 02What the balance sheet says about cash, stock and customers who owe youHow to read cash, inventory, receivables and the current ratio, and why some of the strongest businesses look weak on traditional liquidity measures.
- 03Why the cash flow statement keeps a business honestProfit and cash are not the same thing. How the cash flow statement shows what a business really generates, spends and returns, and which patterns signal strength.
- 04Depreciation, capital spending and the weight of heavy assetsWhy businesses that constantly replace plant and equipment struggle to build wealth, how depreciation and capital spending reveal this, and what it means for manufacturing ventures.
- 05Retained earnings: the quiet engine of compoundingWhat retained earnings are, why their growth rate is one of the clearest signs of a strong business, and why keeping profits only helps if they are reinvested well.
- 06Return on equity, and how leverage can flatter itReturn on shareholders' equity measures how well a business uses its owners' money. Here is how to read it, and how debt and buybacks can make it look better than it is.
- 07Debt as a warning light: what borrowing reveals about a businessHow interest costs, long-term debt and the mix of short- and long-term borrowing can reveal whether a business stands on its own or depends on lenders.
- 08Consistency beats a single great yearWhy ten years of steady, rising earnings tell you far more than one record result, and how to separate a business's real earning power from one-off gains.
- 09The assets the balance sheet cannot seeWhy a company's most valuable assets, its brand and reputation, often appear nowhere on its balance sheet, and what goodwill and intangible assets do and do not tell you.
- 10The equity bond: valuing a business by its growing yieldBuffett's idea of treating shares in a great business like a bond whose interest payment rises every year, and why the price you pay still decides the outcome.
- 11Keeping business records for the long term: retention, archiving and formats that stay readableBackups protect against loss; archives keep records usable for years. How to set retention periods, archive data from old systems, keep files readable and destroy records safely.
These topic-based reading collections are organised alphabetically; chapters may be read in any order.
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