Interpreting financial reports
In Chapter 1, Recognizing the Importance of Data Integrity in Finance, we covered the most common types of financial statements: the balance sheet, income statement, and cash flow statement. In this section, we will build on these concepts and discuss how they are interpreted. I recommend going back to the basic concepts we discussed in that chapter to help familiarize yourselves with these topics further.
Financial statement analysis is a skill that business professionals and leaders need to equip themselves with. Understanding what these financial reports are and how to read them effectively will help you better understand what impacts a business’s key drivers and how to make better decisions based on the data.
Here are the types of analysis that can be done to further understand the financial reports that we will cover in this chapter:
- Horizontal or trend analysis
- Vertical analysis
- Competitor and industry analysis
- Cash...
