I read the Reading Financial Reports for Dummies by Lita Epstein and found it extremely helpful in understanding the basic concepts about financial statements especially the Balance Sheet and Income Statement as well as many other concepts related to reading and understanding financial statements
The key concepts that I would like to share from this book are as follows
- Understanding the balance sheet equation which is Assets = Liabilities plus Equity
- Understanding the notes to financial statements
- Why cash flow is important and how to understand how a company uses cash
- How companies optimize their assets – looks at turnover of assets
- Understanding liquidity
Lesson for your kids – they need to understand the basics of financial reports so that they will not be caught out by misleading statements – this is important when studying anything – get the basics correct and you will understand the rest – I will be teaching many concepts from this book to my kids