What is a financial statement, and how do you read one?

Answer 1

A financial statement is a record of financial activities of a person or business. It is difficult to summarize in a few sentences how to read a financial statement, however the website PracticalECommerce has a tutorial available explaining how to read one.

Answer 2

Financial statements are where we can search for companies with the golden durable competitive advantage. Financial statements come in three distinct flavors:

First, there is the Income Statement: The income statement tells us how much money the company earned during a set period of time. The company’s accountant traditionally generates income statements for shareholders to see every three months during the fiscal year and the whole fiscal year. Using the company's income statement, We can determine such things as the company's margins, its return equity, and, most important, the consistency and direction of its earnings. All of these factors are necessary for determining whether the company is benefiting from a durable competitive advantage.

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