Read the income statement, balance sheet, cash-flow statement, statement of shareholders’ equity, and the notes. Trace revenue, cost, cash conversion, financing, reinvestment, and ownership changes before opening a valuation model.
CHAPTER 02SKILL TRACK 12 MINCHECKED 2026-07-31
Read the business before you value it
The statements are the map. The notes explain the terrain.
STATEMENT WALKTHROUGH
The company sells a product for $100 on credit. The product cost $60.
SEVEN ENTRIES. NO SPREADSHEET NEEDED.
ACTION — complete the statement walkthrough, then continue to Financial Statement Analysis.
CONTINUE TO FINANCIAL STATEMENT ANALYSIS →CHECK YOUR UNDERSTANDING
A company reports higher net income, but cash from operations falls. Is that automatically bad?
SOURCES
- 01U.S. Securities and Exchange Commission — Beginners' Guide to Financial Statements CHECKED 2026-07-31
- 02U.S. Securities and Exchange Commission — How to Read a 10-K/10-Q CHECKED 2026-07-31