Investing Book Review: Financial StatementsJae Jun

www.oldschoolvalue.com

This is a book review and overview of one of the best primers on financial statements.

This is the book to read if you want to have a deep understanding about various financial statements and how it is created.

What You Will Learn

● Why you MUST ● What makes the book so great● How you will benefit from the book● Why the book is for investors

Foreword

● Financial Statements: A Step-By-Step Guide to Understanding and Creating Financial Reports is a great book for those that want a deeper understanding of financial statements or are starting out in accounting.

● It is concise and straight to the point with lots of clarity. It focuses on explaining the basics, how all parts of the financial statements interact and provides examples of how it works.

Financial Statements – By Section

The book is divided into 3 sections.

● Section A - Structure & Vocabulary● Section B - Exploits of Appleseed

Enterprise, Inc.● Section C - Construction & Analysis

Section A - Structure & Vocabulary

Goes over the terminology of the financial statements and what they are in a clear simple manner.

Simple, concise examples and an emphasis on the basics is what makes this book so great.

For example, the book explains the balance sheet role as:

Has today (assets) = Owes today (liabilities) + Worth today (shareholders’ equity)

and the income statement as:

what’s sold in a period minus what it cost to make minus selling and general expenses for the period equals income for the period

Section B - Exploits of Appleseed Enterprise, Inc.

With all the explanations from section A, section B now goes onto applying all that we’ve learnt.

The book leads the reader through drafting the actual books of a hypothetical company.

Common and everyday actions that the company takes to do its business is recorded step by step with many different scenarios as the company grows and expands.

It shows the reader how transactions are processed and recorded.

Section C - Construction & Analysis

The final section is a short section which details information about ● ledgers and ● journals, ● ratios, ● alternative accounting policies and ● how financial statements can be distorted by

companies.

Conclusion

Financial Statements is a great book for anyone who truly wants to understand how to read financial statements and to be able to picture the health of a company by reading its financial statements.

● It is just as good for those who want a quick freshen up.

● Even if it is geared towards accounting, all investors should have a good handle on accounting in order to be able to value and research companies.

You should have a knowledge of how business operates and the language of business [accounting], some enthusiasm for the subject, and qualities of temperament, which may be more important than IQ points. These will enable you to think independently and to avoid various forms of mass hysteria that infect the investment markets from time to time.

Warren Buffett

Jae Jun (jae.jun@oldschoolvalue.com)http://www.oldschoolvalue.com

Old School Value improves your investment decisions and performs deep fundamental analysis and valuation for you. Just like a

personal stock analyst.