How to Read and Understand Financial Statements

Understanding the concepts and language of financial reporting

Course overview

Whether you are an executive, manager or professional, you may need to evaluate a customer, plan new projects or policies, or simply deal with the financial aspects of your role. To be effective you'll have to be able to show the business consequences of your analysis or what you propose. You'll want to be able to use the language of accounting.

This course is designed to give you a working knowledge of the concepts on which accounting is based. You won't learn to keep the books, but you will learn to really understand what financial reports say. You'll learn enough basic terminology to be able to carry on an intelligent discussion of financial implications of your work.

The course is intended to give you the ability to anticipate how others in management will attempt to evaluate your work. It will equip you to understand alternatives and make enlightened choices.

Course outline

  1. Some basics behind the financial statements
    • The Entity and Monetary concepts
    • Cash accounting vs. accrual accounting
  2. The income statement
    • Types of income statements you may see
    • The top line: revenue, sales, When is a sale a sale?
    • What are "Costs of goods" and are they fact or fiction?
    • Types of expenses, and matching expenses with revenue
    • Terminology
    • What you can learn from the income statement (and what you can't)
  3. The balance sheet and the concept behind it
    • Types of balance sheets
    • Review of the asset entries and the rules for their valuation
    • Review of the liability entries
    • What are the "equity" entries and what do they mean?
    • The power of the balance sheet: Linkage to the Income Statement
    • What you can learn from the balance sheet (and what you can't)
  4. The Cash Flow statement
    • Cash flow as the life blood of a business
    • Operating cash flows from the income statement
    • Operating cash flows from balance sheet changes
    • Cash flows to/from investing
    • Cash flows from financing
    • What you can learn from the cash flow statement
  5. Exercises to demonstrate application of the concepts are interspersed through the course.
  6. Review of the ten basic concepts underlying and embodied in the financial statements.

What you will learn

  • Understand basic principles of financial measurements and reporting
  • Learn key vocabulary such as the difference between expense and expenditure
  • Read and understand an income statement
  • Read and understand a balance sheet
  • Read and understand a cash flow statement
  • Apply key concepts such as "revenue recognition" to your everyday work

Who should participate

Sales, marketing and product management professionals who wish to enlarge the scope of their responsibilities should be armed with the understanding that this practical course can provide.

Executives who need to make decisions that impact financial results of an organization will find a new awareness and understanding.

Research, Development, Engineering and Technical Support professionals who want to broaden their understanding of business as an aid to increased effectiveness can profit from this exposure.

Accounting or finance professionals who have not had formal training will find this course to be a great launching platform.

Next Steps...

Contact a Quest Team representative today to discuss how How to Read and Understand Financial Statements can empower your team.