How to Read a Financial Report. John A. Tracy
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HOW TO READ A FINANCIAL REPORT
WRINGING VITAL SIGNS OUT OF THE NUMBERS
Ninth edition
JOHN A. TRACY AND TAGE C. TRACY
Cover Design: Wiley Cover Illustration: Wiley
Copyright © 2020 by John A. Tracy and Tage C. Tracy. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
The Eighth Edition of How to Read a Financial Report: Wringing Vital Signs Out of the Numbers was published by John Wiley & Sons, Inc, in 2014.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Names: Tracy, John A., author. | Tracy, Tage C., author.
Title: How to read a financial report: wringing vital signs out of the
numbers / John A. Tracy and Tage C. Tracy.
Description: Ninth edition. | Hoboken, New Jersey : Wiley, [2020] |
Includes index.
Identifiers: LCCN 2019035972 (print) | LCCN 2019035973 (ebook) | ISBN
9781119606468 (paperback) | ISBN 9781119606451 (Adobe PDF) | ISBN
9781119606482 (epub)
Subjects: LCSH: Financial statements.
Classification: LCC HF5681.B2 T733 2020 (print) | LCC HF5681.B2 (ebook) |
DDC 657/.3—dc23
LC record available at https://lccn.loc.gov/2019035972 LC ebook record available at https://lccn.loc.gov/2019035973
CONTENTS
1 Cover
2 PREFACE TO THE NINTH EDITION
3 Part One FUNDAMENTALS 1 STARTING WITH CASH FLOWS Summary of Cash Flows for a Business What Does Cash Flows Summary Not Tell You? Profit Is Not Measured by Cash Flows Cash Flows Do Not Reveal Financial Condition A Final Note Before Moving On 2 TWO BEDROCK FINANCIAL STATEMENTS Need for Financial Information Reporting Profit Performance: The Income Statement Reporting Financial Condition: The Balance Sheet 3 REPORTING CASH FLOWS Statement of Cash Flows Cash Versus Accrual Accounting Financial Tasks of Business Managers 4 FITTING TOGETHER FINANCIAL STATEMENTS One Problem in Financial Reporting Connecting the Dots
4
Part Two CONNECTIONS
5 SALES REVENUE AND ACCOUNTS RECEIVABLE
Exploring One Link at a Time
How Sales Revenue Drives Accounts Receivable
Accounting Issues
6 COST OF GOODS SOLD EXPENSE AND INVENTORY
Holding Products in Inventory Until They Are Sold
Inventory Control
Accounting Issues
7 INVENTORY AND ACCOUNTS PAYABLE
Acquiring Inventory on the Cuff
Accounting Issues
8