READING FINANCIAL REPORTS FOR DUMMIES

Title Page
Copyright Page
Table of Contents
Introduction
	About This Book
	Conventions Used in This Book
	What You’re Not to Read
	Foolish Assumptions
	Icons Used in This Book
	Beyond the Book
	Where to Go from Here
Part 1 Getting Started with Financial Reports
	Chapter 1 Opening the Cornucopia of Reports
		Figuring Out Financial Reporting
			Preparing the reports
			Seeing why financial reporting counts (and who’s counting)
		Checking Out Types of Reporting
			Keeping everyone informed
			Following the rules: Government requirements
			Going global
			Staying within the walls of the company: Internal reporting
		Dissecting the Annual Report to Shareholders
			Breaking down the parts
			Getting to the meat of the matter
			Keeping the number crunchers in line
	Chapter 2 Recognizing Business Types and Their Tax Rules
		Flying Solo: Sole Proprietorships
			Keeping taxes personal
			Reviewing requirements for reporting
		Joining Forces: Partnerships
			Partnering up on taxes
			Meeting reporting requirements
		Seeking Protection with Limited Liability Companies
			Taking stock of taxes
			Reviewing reporting requirements
		Shielding Your Assets: S and C Corporations
			Paying taxes the corporate way
			Getting familiar with reporting requirements
	Chapter 3 Public or Private: How Company Structure Affects the Books
		Investigating Private Companies
			Checking out the benefits
			Defining disadvantages
			Figuring out reporting
		Understanding Public Companies
			Examining the perks
			Looking at the negative side
		Filing and More Filing: Government and Shareholder Reports
			Quarterly reports
			Yearly report
			The rules of the Sarbanes-Oxley Act
			Dodd-Frank’s impact on financial industry regulation
		Entering a Whole New World: How a Company Goes from Private to Public
			Teaming up with an investment banker
			Making a public offering
	Chapter 4 Digging into Accounting Basics
		Making Sense of Accounting Methods
			Cash-basis accounting
			Accrual accounting
			Why method matters
		Understanding Debits and Credits
			Double-entry accounting
			Profit and loss statements
			The effect of debits and credits on sales
			Depreciation and amortization
		Checking Out the Chart of Accounts
			Asset accounts
			Liability accounts
			Equity accounts
			Revenue accounts
			Expense accounts
		Differentiating Profit Types
			Gross profit
			Operating profit
			Net profit
Part 2 The Big Show: Annual Reports
	Chapter 5 Exploring the Anatomy of an Annual Report
		Everything but the Numbers
			Debunking the letter to shareholders
			Making sense of the corporate message
			Meeting the people in charge
			Finding basic shareholder information
			Getting the skinny from management
			Getting guarantees from management
			Bringing the auditors’ answers to light
		Presenting the Financial Picture
		Summarizing the Financial Data
			Finding the highlights
			Reading the notes
	Chapter 6 Balancing Assets against Liabilities and Equity
		Understanding the Balance Equation
		Introducing the Balance Sheet
			Digging into dates
			Nailing down the numbers
			Figuring out format
		Ogling Assets
			Current assets
			Long-term assets
			Accumulated depreciation
		Looking at Liabilities
			Current liabilities
			Long-term liabilities
		Navigating the Equity Maze
			Stock
			Retained earnings
			Capital
			Drawing
	Chapter 7 Using the Income Statement
		Introducing the Income Statement
			Digging into dates
			Figuring out format
		Delving into the Tricky Business of Revenues
			Defining revenue
			Adjusting sales
			Considering cost of goods sold
			Gauging gross profit
		Acknowledging Expenses
		Sorting Out the Profit and Loss Types
			EBITDA
			Nonoperating income or expense
			Net profit or loss
		Calculating Earnings per Share
	Chapter 8 The Statement of Cash Flows
		Digging into the Statement of Cash Flows
			The parts
			The formats
		Checking Out Operating Activities
			Depreciation
			Inventory
			Accounts receivable
			Accounts payable
			The cash flow from activities section, summed up
		Investigating Investing Activities
		Understanding Financing Activities
			Issuing stock
			Buying back stock
			Paying dividends
			Incurring new debt
			Paying off debt
		Recognizing the Special Line Items
			Discontinued operations
			Foreign currency exchange
		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
			Depreciation
			Revenue
			Expenses
		Figuring out Financial Borrowings and Other Commitments
			Long-term obligations
			Short-term debt
			Lease obligations
		Mergers and Acquisitions: Finding Noteworthy Information
		Pondering Pension and Retirement Benefits
		Breaking Down Business Breakdowns
		Reviewing Significant Events
		Finding the Red Flags
			Finding out about valuing assets and liabilities
			Considering changes in accounting policies
			Decoding obligations to retirees and future retirees
	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
			Mergers and acquisitions
			Goodwill
			Liquidations or discontinued operations
Part 3 Analyzing the Numbers
	Chapter 11 Testing the Profits and Market Value
		The Price/Earnings Ratio
			Figuring out earnings per share
			Calculating the P/E ratio
			Practicing the P/E ratio calculation
			Using the P/E ratio to judge company market value (stock price)
			Understanding variation among ratios
		The Dividend Payout Ratio
			Determining dividend payout
			Digging into companies’ profits with dividends
		Return on Sales
			Figuring out ROS
			Reaching the truth about profits with ROS
		Return on Assets
			Doing some dividing to get ROA
			Ranking companies with the help of ROA
		Return on Equity
			Calculating ROE
			Testing companies using ROE
		The Big Three: Margins
			Dissecting gross margin
			Investigating operating margin
			Catching the leftover money: Net profit margin
	Chapter 12 Looking at Liquidity
		Finding the Current Ratio
			Calculating the current ratio
			What do the numbers mean?
		Determining the Quick Ratio
			Calculating the quick ratio
			What do the numbers mean?
		Investigating the Interest Coverage Ratio
			Calculating the interest coverage ratio
			What do the numbers mean?
		Comparing Debt to Shareholders’ Equity
			Calculating debt to shareholders’ equity
			What do the numbers mean?
		Determining Debt-to-Capital Ratio
			Calculating the debt-to-capital ratio
			What do the numbers mean?
	Chapter 13 Making Sure the Company Has Cash to Carry On
		Measuring Income Success
			Calculating free cash flow
			Figuring out cash return on sales ratio
		Checking Out Debt
			Determining current cash debt coverage ratio
			Computing cash debt coverage ratio
		Calculating Cash Flow Coverage
			Finding out the cash flow coverage ratio
			Mattel
			Hasbro
			What do the numbers mean?
Part 4 How Companies Optimize Operations
	Chapter 14 Turning Up Clues in Turnover and Assets
		Exploring Inventory Valuation Methods
		Applying Three Inventory Valuation Methods
			Average costing
			FIFO
			LIFO
			How to compare inventory methods and financial statements
		Determining Inventory Turnover
			Calculating inventory turnover
			What do the numbers mean?
		Investigating Fixed Assets Turnover
			Calculating fixed assets turnover
			What do the numbers mean?
		Tracking Total Asset Turnover
			Calculating total asset turnover
			What do the numbers mean?
	Chapter 15 Examining Cash Inflow and Outflow
		Assessing Accounts Receivable Turnover
			Calculating accounts receivable turnover
			What do the numbers mean?
		Taking a Close Look at Customer Accounts
		Finding the Accounts Payable Ratio
			Calculating the ratio
			What do the numbers mean?
		Determining the Number of Days in Accounts Payable
			Calculating the ratio
			What do the numbers mean?
		Deciding Whether Discount Offers Make Good Financial Sense
			Calculating the annual interest rate
			What do the numbers mean?
	Chapter 16 How Companies Keep the Cash Flowing
		Slowing Bill Payments
		Speeding Up Collecting Accounts Receivables
		Borrowing on Receivables
		Reducing Inventory
		Getting Cash More Quickly
Part 5 The Many Ways Companies Answer to Others
	Chapter 17 How Companies Find Errors: The Auditing Process
		Inspecting Audits and Auditors
			Looking for mistakes
			Meeting Mr. or Ms. Auditor
		Examining Records: The Role of the Auditor
			Preliminary review
			Fieldwork
			Audit report
		Filling the GAAP
			Accounting standards: Four important qualities
			Changing principles: More work for the FASB
			Getting more involved internationally
	Chapter 18 Government Regulations and Reporting Requirements
		Checking Out the 10-Q
			Financial information
			Other critical matters
		Introducing the 10-K
			Business operations
			Financial data
			Information about directors and executives
			The extras
		Investigating Internal Controls
		Uncovering the Ways Companies Keep in Compliance
		Digging into Board Operations
			Understanding the nominating process
			Contacting board members
		Finding Out about Insider Ownership
	Chapter 19 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?
			Investors
			Capital Markets
			Companies
		Key Differences between GAAP and IFRS
			Accounting framework
			Financial statements
			Revenue recognition
			Assets
			Inventory
			Related-party transactions disclosures
			Discontinued operations
			Impairment charges
	Chapter 20 Understanding the Analyst–Corporation Connection
		Typecasting the Analysts
			Buy-side analysts
			Sell-side analysts
			Independent analysts
			Bond analysts
		Regarding Bond-Rating Agencies
		Delving into Stock Rating
		Taking a Look at How Companies Talk to Analysts
			Analyst calls
			Press releases
			Mobile apps
			Road shows
	Chapter 21 How Companies Communicate with Shareholders
		Making the Most of Meetings
		Checking Out How the Board Runs the Company
			Watching the directors
			Speaking out at meetings
			Moving away from duking it out
		Sorting through Reports
		Catching Up on Corporate Actions
		Culling Information from Analyst Calls
			Listening between the lines
			Knowing when to expect analyst calls
		Staying Up-to-Date Using Company Websites
		Regarding Reinvestment Plans
			Dividend reinvestment plans
			Direct stock purchase plans
	Chapter 22 Keeping Score When Companies Play Games with Numbers
		Getting to the Bottom of Creative Accounting
			Defining the scope of the problem
			Seeing through cooked books
				Big-bath charges
				Creative acquisition accounting
				Miscellaneous cookie jar reserves
				Materiality
				Revenue recognition
		Unearthing the Games Played with Earnings
			Reading between the revenue lines
			Detecting creative revenue accounting
		Exploring Exploitations of Expenses
			Advertising expenses
			Research and development costs
			Patents and licenses
			Asset impairment
			Restructuring charges
		Finding Funny Business in Assets and Liabilities
			Recognizing overstated assets
			Looking for undervalued liabilities
		Playing Detective with Cash Flow
			Discontinued operations
			Income taxes paid
Part 6 The Part of Tens
	Chapter 23 Ten Financial Scandals That Rocked the World
		Enron
		Madoff
		Citigroup
		Adelphia
		WorldCom/MCI
		Tyco
		Waste Management
		Bristol-Myers Squibb
		Halliburton
		Arthur Andersen
	Chapter 24 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
EULA