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The Art of Reading Financial Statements – Practitioner Level

The Art of Reading Financial Statements – Practitioner Level

by a real investor & independent board director, MBA, INSEAD with private equity experience

What you’ll learn

The Art of Reading Financial Statements – Practitioner Level

  • Establish information sources & download the latest financial report & identify accounting standards used IFRS, US GAAP or Local GAAP.

  • Understand & identify main corporate governance elements: Determine corporate governance 1- or 2-tier model and external regulation.

  • Understand the role of the statutory auditor, if audited, identify the statutory auditor, tenure of the statutory auditor and audit opinion.

  • Understand the scope of consolidation (& unconsolidation) of the company

  • Be able to do a vertical analysis of the balance sheet and understand material assets & liabilities in the balance sheet

  • Identify sources of capital, including long-term debt, related schedule, the cost to service long-term debt, including interest coverage ratio, equity capital source

  • Deepen understanding of value creation for shareholders by understanding ROIC & WACC

  • Understand the profitability of the company by analysing revenue segments & cash-generating assets, understand operating cash flow & working capital vs other cash flows

  • Be able to read earnings information including EPS, NOPAT, EBITDA, EBIT & net income

Requirements

  • Being interested in companies

  • Have a minimal knowledge of how companies & businesses in general work

  • Wanting to learn how to read financial statements

Description

Financial statements appear complex and lengthy; their reading requires judgment and practice; people do not know where to start reading and what to look for, or read financial statements in a linear/sequential way without being able to grasp the main elements, even red flags related to the company. This course intends to teach you the

preliminary reading keys

to read, understand & digest financial statements & financial reports.

As Warren Buffett stated, if you want to become a better investor, you have to understand the language of business, which is accounting:

“You have to understand accounting and you have to understand the nuances of

accounting. It’s the language of business

and it’s an imperfect language, but

unless you are willing to put in the effort

to learn accounting –

how to read and interpret financial statements – you really shouldn’t select stocks yourself.

I took the approach of writing this course by reflecting on what I was missing from my teachers & professors in my accounting & corporate finance classes. This course uses a

different approach

to reading financial statements and quickly grasping the essence of the company being analysed.

After taking the course, you will be able to :

  1. Identify & understand accounting standards

    used IFRS, US GAAP or Local GAAP

  2. Differentiate between

    3

    main types of financial statements (balance sheet, cash flow & income statement)

  3. Understand the fundamental

    accounting principles

    like going concerned, fair valuation, the focus of prudence, accrual vs cash accounting, etc.

  4. Understand & identify main

    corporate governance

    elements, including corporate governance 1- or 2-tier models, the role of shareholders & board of directors.

  5. Understand the role of the statutory auditor, being able to identify if a report is audited or unaudited; if audited, determine who the

    statutory auditor

    is, the tenure of the statutory auditor, comments about the statutory auditor’s independence/conflict of interest / related fees and

    audit opinion.

  6. Understand the scope of the reporting company’s

    consolidation

    (& unconsolidation) and the four methods of how subsidiaries can be (or not) consolidated into financial statements.

  7. Do a

    vertical analysis of the balance sheet

    and understand the main profit-generating assets and the sources of capital in the balance sheet.

  8. Identify sources of capital, including long-term debt

    and its related schedule, cost to service long-term debt including interest coverage ratio,

    equity capital source

    including potential retained earnings.

  9. Deepen understanding of value creation for shareholders by understanding ROIC & WACC.
  10. Understand the

    company’s profitability

    by analysing revenue segments (if available) & cash-generating assets, and understand operating cash flow & working capital vs financing & investing cash flows.

  11. Read

    earnings information,

    including EPS, NOPAT, EBITDA, EBIT & net income.

The Art of Reading Financial Statements – Practitioner Level

The course also contains many

practical examples,

as in all my classes. We will practice & discuss the financials of

companies

like

Kellogg’s, Mercedes, Telefonica, 3M, Evergrande, Alphabet, Meta, Microsoft, Unilever, Wells Fargo, Wirecard, Costco, and many others.

At the end of the training,

I will show you the complete process of how I read the financial statements for three companies

(Vonovia, Qurate, and Skywest Airlines) so that you can exactly see and hopefully replicate how I grasp the essence of companies that are not known to me at the beginning.

Last, adult education without practice, knowledge checks, and assignments is only entertainment. For that specific reason, the course contains

10+ assignments to practice yourself as homework and share after completion with me for review

if you wish.

Wishing you a lot of success taking this training and hope it will make you grow as an investor, analyst, or corporate professional. Thanking you as well again for selecting my course

With thanks

Candi

Who this course is for:

  • Students in accounting & corporate finance
  • Value investors
  • People interested in corporate finance & financial statements
  • Financial analysts
  • Business appraisers
  • Accountants
  • Corporate Officers
  • Is anybody interested in analyzing and investing in companies

The Art of Reading Financial Statements – Practitioner Level

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