How to Read Financial Statements: Build Financial Literacy.

Read financial statements and speak the language of business without the drudgery of a traditional accounting course

4.45 (1386 reviews)

Udemy

platform

English

language

Accounting & Bookkeeping

What you will learn

Explain how the balance sheet, income statement, and statement of cash flows are used, what they measure, and why we need three statements.

Differentiate between income and cash flow

Explain what is the balance sheet equation and why the balance sheet equation is the foundational model for accrual accounting/double entry accounting

Define what are assets, liabilities, and equity and how assets, liabilities, and equity relate

Explain how the statement of cash flows and income statement link into the balance sheet

Explain how accounts work like buckets

Locate a real company’s annual report at their website and locate their financial statements within the annual report

Explain who are the six most important stakeholders of a corporation (employees, customers, government, vendors, lenders, investors)

Explain the give and take of a transaction and how to record both sides of the transaction separately with the six stakeholders

Explain which side of the give and take appears on the income statement and on the statement of cash flows

Explain why you can’t measure profit with cash and why you need to use accrual accounting (double-entry accounting), not cash accounting

Illustrate how accrual accounting can both record cash and profits using a spreadsheet

Explain the basis for bookkeeping and basic accounting without learning bookkeeping

Explain what each line item of the balance sheet means and distinguish between current and noncurrent assets, liabilities, and shareholders’ equity

Explain what each line item of the income statement means, including revenues, expenses, and earnings per share

Explain each important line item for the three sections of the statement of cash flows: operating activities, investing activities, and financing activities

Explain how the format of the operating activities section differs from the other two activities (investing and financing)

Test your knowledge by completing 28 multiple-choice questions about the 2013 Facebook annual report

Explain four areas that can go wrong in a business (sales pricing, expense control, asset management, and asset financing)

Explain how four ratios (return on equity, profit margin, asset turnover, and financial leverage) can detect problems within the four potential problem areas

Compute return on equity, profit margin, asset turnover, and financial leverage ratios from real company’s financial statements

For the return on equity ratio, drill down into its three component ratios (profit margin, asset turnover, and financial leverage) to pinpoint problem areas

Start with the profit margin ratio and drill down to compute the gross profit percentage and expense percentage from a real company’s financial statements

Locate management’s explanation for year-to-year changes in ratios from the company’s annual report

Summarize the key reasons for return on equity variations for a real company from year-to-year

Explain how four industries (distribution, manufacturing, service, and financial services differ in the way they make money

Explain how the profit margin, asset turnover, and financial leverage ratios can reveal the key differences in the way that four industries make money

Course Gallery

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Comidoc Review

Our Verdict

A solid foundation builder for understanding financial statements, this course shines with its real-world examples and comprehensive coverage. Some dryness and pacing concerns do not deter from the overall value gain for beginners seeking to grasp fundamental concepts.

What We Liked

Comprehensive coverage of financial statements and their components
Real-world examples and company-specific information for contextual understanding
Clear, concise language with great slides to enhance grasp of key elements
Excellent tools provided for analyzing financial statements

Potential Drawbacks

Delivery seemed dry and unengaging to some learners
Cadence, tone, and grammar could be improved in lectures
Additional company-specific information sometimes presented in a distracting manner
Pace through slides in explanations might be too fast at times