HOW TO READ A FINANCIAL REPORT FOR MANAGERS, ENTREPRENEURS, LENDERS, LAWYERS AND INVESTORS by John A. Tracy (Published by John Wiley & Sons, Inc) (7th Edition, 2009)
There are so many financial books in the market that financial idiots like me 😀 become more confused. A few times I have purchased financial books that I thought would help me understand the financial papers better, but turn out to be disappointing – I need a tutor to explain- which would make the book almost redundant.
John A. Tracy’s Book
So, it was to my absolute delight that I came across this book by John A. Tracy. Just browsing through the first few pages, has shed light on reading the Cash Flows statement. Really, the writer provides explanation for the financial statement provided as though he is speaking to his reader. I can’t explain the joy I felt when I understood the financial statement and its implications.
So easy to understand!
No wonder the book is in its 7th edition!
The writer really is concerned with keeping readers updated since it was first published in 1980.
Of course, there will be questions that crop up as you go through the pages, but most will be explained eventually in the following chapters.
I am now reading the second chapter on income statement and balance sheet, and finding these statements very interesting :
“The balance sheet shown in Exhibit 2.1 on page 9 follows the standardized format regarding the classification and ordering of assets, liabilities, and ownership interests in the business…… On the left side the balance sheet lists assets. On the right side the balance sheet lists the liabilities of the business, which have a first claim on the assets. The sources of ownership (equity) capital in the business are presented below the liabilities, to emphasize that the liabilities have the higher or prior claim on the assets. The owners, or equity holders in a business (the stock-holders of a business corporation) have a secondary claim on the assets – after its liabilities are satisfied.” (page 13)
For a preview of a few pages from the book, please click HERE. :