Sec Edgar AI citations

HereÕs a concise guide to reading financial statements (balance sheet, income statement, cash flow, etc.): 1. Know the Main Statements & Their Purpose Statement Purpose Key Viewpoint Balance Sheet Snapshot at a moment in time Ñ what the company owns vs owes Assets = Liabilities + Equity APA Services +3 SEC +3 PwC +3 Income Statement (Profit & Loss) Shows performance over a period Ñ revenues minus expenses ÒTop line to bottom lineÓ _ revenue _ gross profit _ operating expenses _ net income SEC +3 Schwab Brokerage +3 PwC +3 Cash Flow Statement Tracks actual cash in/outflows over a period Divided into operating, investing, and financing activities Investopedia +3 Wikipedia +3 PwC +3 Statement of Changes in Equity Shows how equity (ownersÕ interest) changed over the period Includes retained earnings, share issuance, etc. Wikipedia +2 PwC +2 Also read the footnotes / disclosures Ñ they explain accounting policies, contingent liabilities, assumptions, and more. Investopedia 2. Walk Through Each Statement Balance Sheet Categorize assets (current vs non-current) and liabilities (current vs long term). Investopedia +3 PwC +3 SEC +3 Equity = residual value after liabilities are deducted. Check liquidity (how many assets convert quickly into cash) and solvency (ability to meet long-term obligations). Income Statement Start with total revenue / sales. Subtract cost of goods sold _ gross profit. Subtract operating and non-operating expenses _ net profit or loss. Watch margins (gross margin, operating margin, net margin) to assess profitability trends. Cash Flow Statement Operating activities: adjustments from net income to cash generated by core operations (add back non-cash items like depreciation, adjust for changes in working capital). Investing activities: cash used for acquiring or disposing assets (like equipment, property). Financing activities: cash flows from debt, equity, dividends, borrowing/repayment. Ends in net change in cash, which should reconcile opening and closing cash on the balance sheet. 3. Use Ratio & Trend Analysis Liquidity Ratios: e.g. Current Ratio = Current Assets / Current Liabilities Profitability Ratios: e.g. Return on Assets (ROA), Return on Equity (ROE) Leverage Ratios: e.g. Debt / Equity Efficiency Ratios: e.g. Receivables Turnover, Inventory Turnover Trend & Common-Size Analysis: express line items as percentages (e.g. each expense as % of revenue) and compare across periods or peer firms. Investopedia +2 PwC +2 4. Cross-Check & Evaluate Quality Ensure balance sheet balances: Assets = Liabilities + Equity. Compare net income vs operating cash flow Ñ if profits exist without cash, it may indicate accounting adjustments or collectible issues. Look at notes / disclosures for assumptions, accounting changes, legal risks, off-balance sheet items. Be wary of unusual items or one-time gains/losses that might distort recurring performance. Analyze consistency, sudden jumps or drops, and how accounting policies (e.g. depreciation, inventory valuation) affect the numbers. If you tell me the accounting standard (e.g. IFRS, GAAP) or your country, I can show you a worked example with your local format.

Review balance sheet, income statement, cash flow statement; analyze ratios, trends, and variances; compare to budgets and industry benchmarks

To read financial statements effectively: 1. Understand the three main statements: - Income Statement - Balance Sheet - Cash Flow Statement 2. Income Statement Analysis: - Review revenue - Examine expenses - Calculate net income - Assess profit margins 3. Balance Sheet Examination: - Check assets - Evaluate liabilities - Analyze shareholders' equity - Calculate key ratios like debt-to-equity 4. Cash Flow Statement Review: - Assess operating cash flow - Examine investing activities - Review financing activities - Understand cash movement 5. Key Ratio Analysis: - Liquidity ratios - Profitability ratios - Efficiency ratios - Leverage ratios 6. Recommended Tools: - {{[[SEC EDGAR]]:https://www.sec.gov/edgar/searchedgar/companysearch.html}} : Use for accessing public company financial reports - {{[[Yahoo Finance]]:https://finance.yahoo.com}} : Provides comprehensive financial statement breakdowns - {{[[Bloomberg]]:https://www.bloomberg.com}} : Offers professional-level financial analysis tools 7. Best Practices: - Compare statements across multiple periods - Benchmark against industry standards - Look for consistent trends - Understand accounting methods used