This document provides an overview of how to read and understand key financial reports and metrics that are used to analyze the financial performance and condition of public companies. It discusses things like the balance sheet, income statement, cash flow statement, financial ratios, and investment strategies. The key elements covered include the components and purpose of the main financial reports, important accounting concepts and terms, and various ratios used to evaluate areas like liquidity, management performance, profitability, and stock valuation.

1. HOW TO READ FINANCIAL REPORTS

9. Cash Flow Statement Net amount of cash taken into the business during a given period and the cash paid out during that same period.

12. Balance Sheet Two sides must balance

22. Shareholders’ equity Interest of shareholders in the company.

23. Retained earnings Money the company keeps for itself rather than being paid out in dividends to the shareholders.

24. If a company is insolvent and owes more than it owns . . . Equity will be a negative amount. Negative amounts are shown in ( )

25. Income Statement

27. Income statement Reports the results of operations over a specified period of time.

28. Income statement Summary of how much the business has taken in and paid out -- its profits.

31. Net income after taxes The bottom line

32. Dividend Distribution of earnings to shareholders.

35. Cash flow from operations Net income + depreciation

36. Amortization conversion of intangible long-lived assets into expenses over a number of accounting periods

38. Basic Financial Ratios (Balance Sheet Ratios) Percentages that provide understanding.

39. Vital Signs Or How to tell if a company is healthy. (Fundamental Analysis)

57. A few helpful terms.

60. INVESTMENT STRATEGIES