The Comprehensive Guide on How to Read a Financial Report: Wringing Vital Signs Out of the Numbers -- Copyright -- Contents -- List of Exhibits -- Preface -- Part One: Financial Report Fundamentals -- Chapter 1: Financial Statement Basics: The Real Meat and Potatoes of Financial Reports -- The Big Three-Financial Condition, Profit Performance, and Cash Flows -- First Up, the Balance Sheet -- Next in Line, the Income Statement -- Bringing Up the Rear, the Statement of Cash Flows -- Additional Financial Statement Considerations and Concepts -- An Important Concept to Understand Throughout This Book -- Chapter 2: Starting with Cash Flows -- Cash Flows-Just How Important Is It for a Business? -- Cash Flows-What Does It Not Tell You? -- Profit and Losses Cannot Be Measured by Cash Flows -- Cash Flows Do Not Reveal Financial Condition -- Chapter 3: Mastering the Balance Sheet -- Solvency versus Liquidity -- Balance Sheet Basics-Left and Right, Top to Bottom -- The Balance Sheet Message -- Chapter 4: Understanding Profit -- Why Discuss Profits Last? -- An Important Question -- Nature of Profit -- Recording Revenue and Expenses -- Recording Revenue -- Recording Cost of Goods Sold Expense -- Recording Selling, General, and Administrative (SG&A) Expenses -- Recording Depreciation Expense -- Recording Interest Expense -- Recording Income Tax Expense -- Recording Net Income into Retained Earnings -- Winding Up -- Chapter 5: Profit Isn't Everything and All Things -- Remember-Everything's Connected -- Threefold Financial Task of Business Managers -- One Problem in Reporting Financial Statements -- Interlocking Nature of the Three Financial Statements -- Connecting the Dots and Expanding Your Knowledge of Financial Reports -- Part Two: Working Capital Connections -- Chapter 6: Our Case Study-Company Introductions -- Company Overviews -- HareSquared, Inc.

TortTech, Inc. -- Friendly Reminders -- Chapter 7: Sales Revenue, Trade Accounts Receivable, and Deferred Revenue -- Exploring One Link at a Time -- How Sales Revenue Drives Accounts Receivable -- A Special Link - How Accounts Receivable Drives Deferred Revenue -- Accounting Issues and Our Case Study -- Chapter 8: Cost(s) of Goods Sold Expense and Inventory -- Exploring Our Second Critical Link -- What Is in Costs of Goods Sold Expense? -- Holding Products in Inventory before They Are Sold -- Accounting Issues and Our Case Study -- Chapter 9: Inventory and Accounts Payable -- Examining Our Third Link, with a Twist -- Acquiring Inventory on the Cuff -- Accounting Issues and Our Case Study -- Chapter 10: Operating Expenses and Accounts Payable -- The Connection Is Important but Let's Start with the Basics -- Recording Expenses before They Are Paid -- Accounting Issues and Our Case Study -- Chapter 11: Accruing Liabilities for Incurred but Unpaid Expenses -- Understanding Hidden Risks with This Connection -- Recording the Accrued Liability for Operating Expenses -- Accounting Issues and Our Case Study -- Chapter 12: Income Tax Expense-A Liability and Asset? -- Why the Income Tax Connection Can Be Very Confusing -- Taxation of Business Profit -- Accounting Issues and Our Case Study -- Part Three: Financial Capital Connections and Cash Flows -- Chapter 13: Our Case Study-Company Updates and Assessments -- The Big Picture-Comparing Both Companies -- HareSquared, Inc. Update -- The Income Statement -- The Balance Sheet -- The Statement of Cash Flows -- TortTech, Inc. Update -- The Income Statement -- The Balance Sheet -- The Statement of Cash Flows -- What's Next? -- Chapter 14: Long-Term Assets and Depreciation, Amortization, and Other Expenses -- A Brief Review of Expense Accounting -- Fixed Assets and Depreciation Expense.

Intangible Assets and Amortization Expense -- Accounting Issues and Our Case Study -- Chapter 15: Long-Term Liabilities, Interest, and Other Expenses -- Debt, Debt, and More Debt-Multiple Financial Report Connections -- Understanding Debt Basics and Its Location in the Balance Sheet -- Bringing Interest Expense Up to Snuff -- Accounting Issues and Our Case Study -- Chapter 16: Net Income, Retained Earnings, Equity, and Earnings per Share (EPS) -- The All-Important EPS -- Net Income into Retained Earnings -- Earnings per Share (EPS) -- Accounting Issues and Our Case Study -- Chapter 17: Cash Flow from Operating (Profit-Making) Activities -- A Different Type of Connection -- Profit and Cash Flow from Profit: Not Identical Twins! -- Changes in Assets and Liabilities that Impact Cash Flow from Operating Activities -- A Quick Word about the Direct Method for Reporting Cash Flow from Operating Activities -- Accounting Issues and Our Case Study -- Chapter 18: Cash Flows from Investing and Financing Activities -- Understanding the Real Capital Structure and Needs of a Business -- Rounding Out the Statement of Cash Flows -- Seeing the Big Picture of Cash Flows -- Accounting Issues and Our Case Study -- Part Four: Financial Report Analysis -- Chapter 19: Expansion and Contraction Impacts on Cash Flow -- Setting the Stage -- Cash Flows in the Steady-State Case -- Cash Flow Growth Penalty -- Cash Flow "Reward" from Decline -- Red Ink and Cash Flow -- Final Comment -- Chapter 20: What Is EBITDA and Why Is It Important? -- EBITDA-An Alternative View of Cash Flow or Operating Income? -- Relying on EBITDA-The Pros and Cons -- Chapter 21: Financial Statement Footnotes-The Devil's in the Details -- The Meat of the Financial Report -- Financial Statements-Brief Review -- Why Footnotes? -- Two Types of Footnotes -- Management Discretion in Writing Footnotes.

Analysis Issues -- Chapter 22: Financial Statement Ratios-Calculating and Understanding -- Financial Reporting Ground Rules -- Financial Statement Preliminaries -- Extraordinary Gains and Losses -- No Cash Flow Ratios, But . . . -- A New Financial Statement -- Benchmark Financial Ratios -- Current Ratio -- Acid Test Ratio (aka Quick Ratio) -- Debt to Equity Ratio -- Debt Service Coverage Ratio -- Return on Sales Ratio -- Return on Equity (ROE) -- Earnings per Share (EPS) -- Price/Earnings (P/E) Ratio -- Market Cap -- Final Comments -- Chapter 23: Profit Analysis for Business Managers -- Why All Businesses Should Produce and Use Two Types of Financial Statements -- Managerial Accounting -- Beyond the Income Statement -- Classifying Operating Expenses -- Comparing Changes in Sales Prices and Sales Volume -- Breakeven Point -- Final Point -- Chapter 24: Our Case Study and the Moral of the Story-The Good, the Bad, and the Ugly -- The Changing Economic Environment -- HareSquared, Inc.'s Financial Results and Ending Position -- TortTech, Inc.'s Financial Results and Ending Position -- The Good, the Bad, and the Ugly -- Part Five: Financial Report Truthfulness -- Chapter 25: Choosing Accounting Methods and Massaging the Numbers -- Chapter Preamble -- Choosing Accounting Methods -- Massaging the Numbers -- Business Managers and Their Accounting Methods -- Consistency of Accounting Methods -- Quality of Earnings -- Chapter 26: Audits of Financial Reports -- External Examinations of Financial Statements-What Types and Why -- Why Audits? -- Certified Public Accountant (CPA) -- Are Audits Required? -- Clean Audit Opinion -- Do Auditors Discover Accounting Fraud? -- Reading an Auditor's Report -- Post-Sox -- Chapter 27: Small Business Financial Reporting -- Identifying a Small Business -- Different Standards for Different Businesses.

The Challenges of Reading a Small Business Financial Report -- Chapter 28: Basic Questions, Basic Answers, No BS -- No Question Is Out of the Question! -- When You Sell a Stock Does the Company Get Your Money? -- Are Financial Reports Reliable and Trustworthy? -- Nevertheless, Are Some Financial Statements Misleading and Fraudulent? -- Is It Worth Your Time to Compute Financial Statement Ratios? -- Why Read Financial Statements, Then, If You Won't Find Information That Has Been Overlooked by Others? -- The Financial Statements and Footnotes of Large Public Companies Would Take Several Hours to Read Carefully. What's the Alternative? -- Is There Any One Basic Litmus Test for a Quick Gauge of a Company's Financial Performance? -- Do Financial Statements Report the Truth, the Whole Truth, and Nothing but the Truth? -- Does Its Financial Report Explain the Basic Profit-Making Strategy of the Business? -- Does the Market Price of a Public Company's Stock Shares Depend Directly and Only on the Information Reported in Its Financial Statements? -- Does the Balance Sheet of a Private Business Tell the Market Value of the Business? -- Do Books on Investing and Personal Finance Refer to Financial Statements? -- A Very Short Summary -- About the Authors -- About the Companion Website -- Index.