Income Statement, and Cash Flow Statement
Master the Key Ratios to Analyze the
True Financial Performance of a Company
Know the Tricks to Identify Shenanigans
Companies Use to Manipulate Financial Statements
Over the years, if there is one big issue I have seen small investors face while searching for businesses to invest in, it is that they find it difficult to read financial statements that companies use to report their financial performance.
The terms like Assets, Liabilities, and Equity seem like bouncers!
In fact, the very term ‘financial statements’ sounds so over-whelming to most investors, that they don’t look what lies inside an annual report, which is such an important document to read before investing in any business.
But the reality is that reading financial statements in one of the most important skills you must learn before getting into stock picking…
…and it is one skill that would give you an upper edge over 95% of all individuals who are just trying their luck in the stock market, as they speculate in stocks without understanding what they are getting into.
When people ask me why a large majority of people don’t succeed in stock market investing, my reply is, “Because a large majority of people don’t know how to read financial statements!”
And why does a large majority of people don’t know how to read financial statements?
Because most of them see financial statements and accounting as a complex web, which they would never learn to pass through.
The reality, however, is that if you know just the right ways to read and understand the financial statements, you can make much better investment decisions than someone who would just not look at the ‘numbers’.
I have been teaching financial statement analysis to the students of my one-year Mastermind Value Investing Course, and I am happy to report that a lot of them are now well-equipped to analyze balance sheets, income statements, and cash flow statements to make better investment decisions.
Need proof? Here is what a few Mastermind students have to say about what they’ve learned on financial statement analysis in the Mastermind course…
Over the last few months, I have received requests from a lot of readers who just wish to learn the part on analyzing financial statements and go for the one-year Value Investing Course later.
In light of that, I am happy to announce a new 2-month course exclusively focused on financial statement analysis, which I call…
(2-Month Online Course in Analyzing Financial Statements)
We all remember Cuba Gooding Jr.’s immortal line from the movie Jerry Maguire, “Show me the money!”
Well, that’s what financial statements do. They show you the money. They show you where a company’s money came from, where it went, and where it is now.
If you know how to do basic math and can make simple additions, subtractions, multiplications, and divisions, you can learn to read the financial statements.
I have designed the Financial Statement Analysis for Smart People course to help you gain a deep understanding of how to read financial statements, and in a very simplified manner.
By taking up this course..
- You will not only learn how to look at each number in the three financial statements – Balance Sheet, Income Statement, and Cash Flow Statement – but will also learn what numbers to look at deeply and which ones to avoid.
- You will learn how the three financial statements are inter-connected and how you can assess a company’s true financial health by studying the inter-connections.
- You will learn how to calculate the most important ratios to be able to separate the visibly good numbers from the actual ones.
- You will learn how to read an annual report, especially the key sections that will give you a lot of ideas on what the company has done in the past, and where it is headed in the future.
- Very importantly, you will learn how companies commit financial frauds – known as ‘shenanigans’ – and how you can identify them so as to reduce the number of mistakes you make by buying bad businesses.
Charlie Munger says, “All I want to know is where I’m going to die so I’ll never go there.”
Learning how to read, understand, and analyze financial statements will help you with that – identifying the businesses that can cause you permanent loss of capital so that you can avoid investing in them.
Of course, when you know how to read between the numbers, you will also be able to identify the great and good businesses that can help you build wealth over the long run.
Now, without wasting any more of your time, let me come straight to what you will get by subscribing to the Financial Statement Analysis for Smart People course.
What You’ll Get When You Subscribe…
- 10 comprehensive PDF lessons on – Reading annual reports, understanding financial statements, conducting comprehensive ratio analysis, and identifying financial shenanigans.
- 4 hours of classroom-style video lessons
- Several real-life examples of Indian companies to help put things into perspective
- Exercises at each stage to test your learning
- Exclusive members-only forum to ask questions and discuss problems you face while analyzing financial statements
In all, here is what you will learn by taking up this course…
1. Analyze the Balance Sheet
- What is a Balance Sheet and how does it showcase a company’s financial strength?
- What is Equity and why is it one of the most important numbers to analyze for you as an investor?
- What are the various types of Liabilities and how to sense whether they indicate a safe or troublesome future for the company?
- How can companies benefit from working on ‘someone else’s money’, and that too for free?
- How to assess a company’s Working Capital situation?
- How to perform a common-size analysis of Balance Sheet to investigate whether the company’s financial position has improved or deteriorated over the years?
2. Analyze the Income Statement
- What is an Income Statement and how does it play an important role in helping you understand a company’s competitive moat?
- What is Depreciation and how its study can help you get a good picture of the company’s earning power?
- How is Income Statement connected to the Balance Sheet and how you can do a company’s comprehensive analysis by studying the connections?
- How you can study a company’s historical Income Statements using the common-size analysis technique?
3. Analyze the Cash Flow Statement
- What is a Cash Flow Statement and why it the most important of all financial statements for you as an investor?
- How to use cash flows to assess the true profitability of a company, which the Income Statement may fail to depict?
- How to evaluate a company’s sources and uses of cash and what they suggest about how the managers are managing the business?
- When are large cash inflows great for a business and when they are gruesome?
- What is Free Cash Flow, how do you calculate it, and why it is one of the most important numbers in assessing the quality of a company’s business?
4. Use Ratio Analysis to Evaluate Financial Performance
- What is Ratio Analysis and how it could enable you to express relationships between the various financial statements?
- How does the universe of ratios looks like, and how various parts of this universe can help you assess different aspects of a company’s financials?
- How you can easily tell by studying a few ratios whether a company must be researched further or must be junked?
- How ratios can help you assess the quality of a company’s management?
- How ratios can help you predict the demise of an otherwise good business?
- How you can decompose some key ratios (like ROE) to understand what really drives a business and whether it is good or bad for your investment in the same?
5. Identify Financial Shenanigans to Avoid Permanent Capital Loss
- What are Financial Shenanigans, why do managers indulge in them, and how you can identify them to avoid permanent loss of your capital?
- What are the various types of shenanigans and how you can pick them up while analyzing the financial statements?
- How do companies inflate their revenue and earnings and how do you spot their mischief?
- How to create a “shenanigans checklist” to identify businesses that play around with investors’ trust and money?
- Which are the few sectors/places that are the hotbed of financial shenanigans and how you can avoid going there?
If you are interested, I invite you to join the Financial Statement Analysis for Smart People course and learn how to make better investment decisions (and more importantly, how to avoid mistakes) by knowing how to read, understand and analyze financial statements.
Benjamin Graham, the father of Value Investing, said that you should buy your stocks like you buy your groceries.
If you focus on the fundamentals of a business, which are reported by companies using financial statements, you shouldn’t go wrong in your investment decisions.
You see, while the Financial Statement Analysis for Smart People course will not train you to be an accountant (just as a first-aid course will not make you a doctor), I’m sure it would give you the confidence to be able to look at a set of financial statements and make sense of them…
…so that you are able to make much better and well-informed investment decision than you are doing now, and more importantly, you don’t get burned.
Chief Tribesman, Safal Niveshak
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P.P.S. In case you face any issues making the payment, please write to me at firstname.lastname@example.org or call me at +91-80970 73918.
P.P.P.S. Please read the “Frequently Asked Questions” to avoid future confusions/conflicts.