For any business owner or manager, to keep his business up and running, it's very important to manage three aspects: making sure they earn a profit, maintaining assets & liability to an acceptable level, and ensuring that business generates cash flows.
In order to do this, you need to have the ability to read three main financial statements:
Balance Sheet
Income Statement
Cash Flow Statement
This book beautifully teaches you to do just that. Furthermore, the author (being CPA himself), explains how these three statements are interlinked to each other. This part is often neglected by other authors, as it's equally improvement to see how to change Income Statement can change certain things in the Balance Sheet or Cash Flow Statement or vice-versa.
So, this book is for beginners, for someone who has the basics of accounting. But, as someone who has studied Accounts for some years, and has prepared all the three financial statements, I too found some Aha! moments. Paperback This book is an absolute gem for people from non-accounting background. This book lays out the intricate details of the connection between the financial statements and brings to light the importance of differentiating the Earnings from the Cash-Flow. Its a must read book for any people starting out into Stock Investments with less accounting acumen. Paperback I read this book as part of my development goals for the year. I read it and took notes and studied it. The book is like reading a textbook and most of it was review from some of my MBA courses.
I do plan to create a spreadsheet to measure the financial ratios of some companies just for practice after reading this.
If you work in business in a non-accounting or finance role and want to learn more about how companies make profit, pay and control expenses, massage quarterly numbers reported to Wall Street, and accrual based accounting this book is a good starting point. Paperback This book takes you through entries on financial documents like income statements and cash flow statements to show you how they tie together and what they might mean for a business. The author ends with some broader discussion of accounting and auditing decisions and challenges.
As a guy who eked out a ‘C’ in “Accounting for Non-Majors”, this topic is not one I find particularly interesting however Mr. Tracy does a good job making the discussion relevant and digestible even for people like me. Paperback A very comprehensive guide on how to read financial statements. The last 20 pages are way too elementary, but overall it is a good revision on some of the key concepts in studying companies. I would recommend this to anyone who are new to accounting. Paperback
Hidden somewhere among all the numbers in a financial report is vitally important information about where a company has been and where it is going. This is especially relevant in light of the current corporate scandals.
The sixth edition of this bestselling book is designed to help anyone who works with financial reports--but has neither the time nor the need for an in-depth knowledge of accounting--cut through the maze of accounting information to find out what those numbers really mean. How to Read a Financial Report: Wringing Vital Signs Out of the Numbers
John A. Tracy ´ 4 Summary
An introduction to financial statements: how to read them, ratios, pitfalls, common practices. That's a good starting point for those who need such knowledge (managers, entrepreneurs...).
As the book was written for US readers (US accounting practices and regulations), you'll obviously have to find additional material elsewhere if you are in another country. Paperback Strongly recommend this book for any managers/lenders/investors/founders who need to work intimately with financial statements.
Ideally, 75% what's covered in this book should feel like a summary of your existing financial knowledge. If it doesn't then I suggest picking up 'Financial Intelligence: A Manager's Guide for Knowing What the Numbers Actually Mean' as a starting point. Paperback There are better books out there, explaining the terms simpler than this book. However, this book brings a new perspective.
The only annoying thing was that you always had to go 3-4 pages back to understand the examples and to check the numbers. That gets too annoying after some time. Paperback This book saved my life in Financial Reporting!! The text book was not computing, and this spoke my language (and had helpful visuals!). Paperback I had know knowledge on financial terms and how to read financial reports before reading this. Easy understandable terminology and challenging. Anyone can start reading this. For sure I will reread this book every year. Paperback