This book aims to explain how to read, analyse, and interlink the voluminous information available in financial statements using charts, case analysis, and other tools. It provides an in-depth, step-by-step approach to understanding and decoding financial statements.
The book is structured around five keys, each focusing on different components of financial statements:
Key #1 – Statement of Profit & Loss
o Covers Sales, Other Income, Cost of Materials Consumed, Manufacturing and Operating Costs, Finance Costs, Depreciation and Amortisation, Tax Expenses, Other Expenses, and Exceptional Items
Key #2 – Balance Sheet
o Details Tangible and Intangible Fixed Assets, Investments, Loans & Advances, Other Assets, Inventories, Trade Receivables, Cash and Bank Balances, Shareholder's Funds, Provisions, Contingent Liabilities, Borrowings, Trade Payables, and Other Liabilities
Key #3 – Connecting Statements
o Examines Significant Accounting Policies, Notes on Accounts, and Cash Flow Statements
Key #4 – Auditor's Report and CARO
o Discusses the Concept of Audit, Internal Financial Controls, Auditor's Opinion, Emphasis of Matters, and the Companies Auditor's Report Order (CARO)
Key #5 – Master Key
o Integrates the Profit & Loss Statement, Balance Sheet, Notes on Accounts, Auditor's Report, and CARO Report for comprehensive financial statement analysis
