Balance Sheets : Contents, Analysis & Interpretation

Understanding and interpreting the balance sheet and profit and loss account is of crucial importance for investors. Intelligently analysed, these key financial statements reveal both the apparent and the underlying financial health of a company.

The first part of this book describes the format, features and contents of the balance sheet and the profit and loss account. All the basic concepts and the technical terms used in these financial statements are explained in simple, non-technical language.

Part two introduces the reader to the techniques of analysing the financial data contained in the balance sheet and the profit and loss account-and to draw logical and reliable conclusions from the analysis. All the commonly-used methods of analysis are described, using real-life examples of published annual reports of companies:

• Interpretation of Comparative Statements
• Interpretation of Trend Relatives
• Common-size Statements
• Analysis of Working Capital
• Ratio Analysis
• Analysis of Current Financial Condition
• Analysis of Long-term Financial Condition
• Analysis of Income, Costs, and Profit
• The Cash-flow Statement
• Statement of Changes in Net Working Capital
• Statement of Sources and Applications of Funds, etc.