Reading Financial Reports for Dummies (66 page)

Do More with Dummies

Products for the Rest of Us!

DVDs • Music • Games • DIY

Consumer Electronics • Software • Crafts

Hobbies • Cookware • and more!

Check out the Dummies Product Shop at www.dummies.com for more information!

spine=.768”

Business/Finance

2nd Edition

Making Everything Easier!™

The ins and outs of

financial reports, explained

2nd Edition

in plain English

Open the book and find:

Want to make sense of financial reports? This easy-to-

• The accounting basics necessary to

Fi

understand financial reports

follow guide gives you a set of tools to understand these

n

complicated statements, helping you read between the

• New information on reporting

a

lines to determine a company’s true financial health. You’ll
standards for private/small versus

Reading

n Readi

/files/02/53/84/f025384/public/large businesses

make informed decisions about investing, spot possible

c

problems, and use these reports to manage your own

• Updates surrounding the 2007

ia

department or company for success.

law on international financial

l

reporting standards

R

• Get down to reporting basics — recognize different business

Financial Reports

n

• The impact of corporate

types and how their structure affects the books, and grasp the

e g

communications and new

accounting method underlying it all

p

technologies

o

• Analyze the annual report — make sense of the balance sheet,

• New real-world examples that

r

income and cash flow statements, and the notes while spotting

t

reflect current trends

red flags

s

• Know your numbers — keep an eye on whether a company is

• Updated Web sites and resources

making a profit or suffering a loss

• Tips for spotting the fluff in

• Understand how companies optimize operations — use reports

financial reports

to measure how efficiently management is using its resources

• Meet the financial watchdogs — from auditors to analysts, see

who certifies report accuracy and how recent scandals have

changed the rules

Learn to:

Go to dummies.com®

• Make sense of important financial

• Practice makes perfect — put your skills to the test by dissecting

for more!

documents, from balance sheets to

the annual reports of two similar companies throughout the

cash flow statements

book

• Locate the key areas to focus on when

reviewing reports

• Explore international accounting

standards that may soon be accepted

in the U.S.

$21.99 US
/ $23.99 CN / £14.99 UK

• Understand recent SEC and other

Lita Epstein, MBA,
is a seasoned financial writer who focuses on helping
governmental regulatory changes

ISBN 978-0-470-37628-7

people understand the complex worlds of money and finance. She was a financial manager for a medical clinic and content director for a financial services Web site, MostChoice.com. She also writes for AOL’s Blogging
Lita Epstein, MBA

Stocks and WalletPop.

Author,
Bookkeeping For Dummies
and

Epstein

Bookkeeping Workbook For Dummies

• Reading Financial Reports FOR Dummies 2nd Edition
  
  • Contents at a Glance
    
  • Table of Contents
    
  • Introduction
    
  • Part I Getting Down to Financial Reporting Basics
    
    • Chapter 1 Opening the Cornucopia of Reports
      
      • Figuring Out Financial Reporting
        
      • Checking Out Types of Reporting
        
      • Dissecting the Annual Report to Shareholders
        
    • Chapter 2 Recognizing Business Types and Their Tax Rules
      
      • Flying Solo: Sole Proprietorships
        
      • Joining Forces: Partnerships
        
      • Seeking Protection with Limited Liability Companies
        
      • Shielding Your Assets: S and C Corporations
        
    • Chapter 3 Public or Private: How Company Structure Affects the Books
      
      • Investigating Private Companies
        
      • Understanding Public Companies
        
      • A Whole New World: How a Company Goes from Private to Public
        
    • Chapter 4 Digging into Accounting Basics
      
      • Making Sense of Accounting Methods
        
      • Understanding Debits and Credits
        
      • Checking Out the Chart of Accounts
        
      • Differentiating Profit Types
        
  • Part II Checking Out the Big Show: Annual Reports
    
    • Chapter 5 Exploring the Anatomy of an Annual Report
      
      • Everything but the Numbers
        
      • Presenting the Financial Picture
        
      • Summarizing the Financial Data
        
    • Chapter 6 Balancing Assets against Liabilities and Equity
      
      • Understanding the Balance Equation
        
      • Introducing the Balance Sheet
        
      • Ogling Assets
        
      • Looking at Liabilities
        
      • Navigating the Equity Maze
        
    • Chapter 7 Using the Income Statement
      
      • Introducing the Income Statement
        
      • Delving into the Tricky Business of Revenues
        
      • Acknowledging Expenses
        
      • Sorting Out the Profit and Loss Types
        
      • Calculating Earnings per Share
        
    • Chapter 8 The Statement of Cash Flows
      
      • Digging into the Statement of Cash Flows
        
      • Checking Out Operating Activities
        
      • Investigating Investing Activities
        
      • Understanding Financing Activities
        
      • Recognizing the Special Line Items
        
      • Adding It All Up
        
    • Chapter 9 Scouring the Notes to the Financial Statements
      
      • Deciphering the Small Print
        
      • Accounting Policies Note: Laying Out the Rules of the Road
        
      • Figuring Out Financial Borrowings and Other Commitments
        
      • Mergers and Acquisitions: Noteworthy Information
        
      • Pondering Pension and Retirement Benefits
        
      • Breaking Down Business Breakdowns
        
      • Reviewing Significant Events
        
      • Finding the Red Flags
        
    • Chapter 10 Considering Consolidated Financial Statements
      
      • Getting a Grip on Consolidation
        
      • Looking at Methods of Buying Up Companies
        
      • Reading Consolidated Financial Statements
        
      • Looking to the Notes
        
  • Part III Analyzing the Numbers
    
    • Chapter 11 Testing the Profits and Market Value
      
      • The Price/Earnings Ratio
        
      • The Dividend Payout Ratio
        
      • Return on Sales
        
      • Return on Assets
        
      • Return on Equity
        
      • The Big Three: Margins
        
    • Chapter 12 Looking at Liquidity
      
      • Finding the Current Ratio
        
      • Determining the Quick Ratio
        
      • Investigating the Interest Coverage Ratio
        
      • Comparing Debt to Shareholders’ Equity
        
      • Determining Debt-to-Capital Ratio
        
    • Chapter 13 Making Sure the Company Has Cash to Carry On
      
      • Measuring Income Success
        
      • Checking Out Debt
        
      • Calculating Cash Flow Coverage
        
  • Part IV Understanding How Companies Optimize Operations
    
    • Chapter 14 How Reports Help with Basic Budgeting
      
      • Peering into the Budgeting Process
        
      • Building Budgets
        
      • Providing Monthly Budget Reports
        
      • Using Internal Reports
        
    • Chapter 15 Turning Up Clues in Turnover and Assets
      
      • Exploring Inventory Valuation Methods
        
      • Applying Three Inventory Valuation Methods
        
      • Determining Inventory Turnover
        
      • Investigating Fixed Assets Turnover
        
      • Tracking Total Asset Turnover
        
    • Chapter 16 Examining Cash Inflow and Outflow
      
      • Assessing Accounts Receivable Turnover
        
      • Taking a Close Look at Customer Accounts
        
      • Finding the Accounts Payable Ratio
        
      • Determining the Number of Days in Accounts Payable
        
      • Deciding Whether Discount Offers Make Good Financial Sense
        
    • Chapter 17 How Companies Keep the Cash Flowing
      
      • Slowing Down Bill Payments
        
      • Speeding Up Collecting Accounts Receivables
        
      • Borrowing on Receivables
        
      • Reducing Inventory
        
      • Getting Cash More Quickly
        
  • Part V The Many Ways Companies Answer to Others
    
    • Chapter 18 Finding Out How Companies Find Errors: The Auditing Process
      
      • Inspecting Audits and Auditors
        
      • Examining Records: The Role of the Auditor
        
      • Filling the GAAP
        
    • Chapter 19 Digging into Government Regulations
      
      • Checking Out the 10-Q
        
      • Introducing the 10-K
        
      • Investigating Internal Controls
        
      • Uncovering the Ways Companies Keep in Compliance
        
      • Digging into Board Operations
        
      • Finding Out about Insider Ownership
        
    • Chapter 20 Creating a Global Financial Reporting Standard
      
      • Why Develop a Worldwide Financial Standard?
        
      • Key Moves to Reshape Global Financial Reporting
        
      • Who Benefits from a Global Standard and How?
        
      • Exploring Key Differences between GAAP and IFRS
        
    • Chapter 21 Checking Out the Analyst-Corporation Connection
      
      • Typecasting the Analysts
        
      • Regarding Bond Rating Agencies
        
      • Delving into Stock Rating
        
      • Taking a Look at How Companies Talk to Analysts
        
    • Chapter 22 How Companies Communicate with Shareholders
      
      • Making the Most of Meetings
        
      • Checking Out How the Board Runs the Company
        
      • Sorting through Reports
        
      • 287 Catching Up on Corporate Actions
        
      • Culling Information from Analyst Calls
        
      • Staying Up to Date Using Company Web Sites
        
      • Regarding Reinvestment Plans
        
    • Chapter 23 Keeping Score When Companies Play Games with Numbers
      
      • Getting to the Bottom of Creative Accounting
        
      • Unearthing the Games Played with Earnings
        
      • Exploring Exploitations of Expenses
        
      • Finding Funny Business in Assets and Liabilities
        
      • Playing Detective with Cash Flow
        
  • Part VI The Part of Tens
    
    • Chapter 24 Ten Financial Scandals That Rocked the World
      
      • Enron
        
      • Citigroup
        
      • Adelphia
        
      • WorldCom/MCI
        
      • Sunbeam
        
      • Tyco
        
      • Waste Management
        
      • Bristol-Meyers Squibb
        
      • Halliburton
        
      • Arthur Andersen
        
    • Chapter 25 Ten Signs That a Company’s in Trouble
      
      • Lower Liquidity
        
      • Low Cash Flow
        
      • Disappearing Profit Margins
        
      • Revenue Game-Playing
        
      • Too Much Debt
        
      • Unrealistic Values for Assets and Liabilities
        
      • A Change in Accounting Methods
        
      • Questionable Mergers and Acquisitions
        
      • Slow Inventory Turnover
        
      • Slow-Paying Customers
        
  • Glossary
    
  • Index