In this unit, you will learn about financial reporting and examine the financial statements of a public company. Public companies are required to file their financial statements with the SEC on a quarterly and annual basis. The SEC has a standard format for presenting financial information that helps us read and interpret financial information. Understanding financial reports can help you in a variety of important ways: judging the financial health of the company you work for, looking into investment options, analyzing a potential vendor, customer, or partner, and even considering employment options. Knowing how to read and analyze financial statements is a must for anyone in business.
Completing this unit should take you approximately 6 hours.
This video is a reminder of what the 4 basic financial statements contain - the Income Statement, Balance Sheet, Statement of Retained Earnings, and Cash Flow Statement.
Read these remarks from a former SEC Commissioner, which goes behind the scenes to discuss issues of reporting financial information for public companies. GAAP is integral in reporting transactions.
This is a great introduction to resources that you can use to research any public company. All public companies must report their financials; quarterly reports, end of year tax forms, changes in top management, and so on. If you ever need to look up a company, this will give you the tools you need to navigate the public records system.
Although learning how to read a report sounds daunting, you might be surprised at how much valuable information they offer.
Read this chapter, which discusses how to analyze financial statements and demonstrates the use of ratios and the horizontal and vertical analysis tools that everyone from creditors to investors, vendors, and top management use when they want to identify the strengths and weaknesses in an organization. Analysis tools can help you compare companies of different sizes, companies in different industries, and the same company over time.
This video, and the others that follow, will provide demonstrations of how to perform various aspects of financial statement analysis. These brief videos can help make learning the calculations very simple and save you a lot of time. This first video will describe how to do vertical analysis for financial statements.
Take this assessment to see how well you understood this unit.