Reading Financial Reports For Dummies, 3rd Edition

Part II

Checking Out the Big Show: Annual Reports

Top Five Things to Look for in Financial Reports from Management

• How do they recognize revenue? Look for details about when they record sales, which impacts the earnings the report.
• Have they restructured? Find out whether they plan to close or change divisions, which can impact earnings potential.
• Do they have enough on hand to pay pension obligations? Cash for pensions can drain resources needed for growth if the company's pension plans are short.
• Must they set aside a large chunk for doubtful accounts? If customers aren't paying the bills, the company may not have the cash it needs.
• Are there any pending lawsuits? Settling of a lawsuit can drain cash needed for growth.

Find more on the best web sources for financial report research at www.dummies.com/extras/readingfinancialreports.

In this part…

• Discover the parts of an annual report and look at how to summarize financial information.
• Check out assets, liabilities, and equity, and see how to review and examine them to keep things in balance.
• Understand how to use income statements to determine whether a company has made a profit.
• Look at statements of cash flows to determine whether the company has enough cash to operate.
• Read behind the numbers and scour financial reports for red flags.
• Understand consolidated financial statements and look at ways companies buy other ...