hello,
Being a para medical professional, reading a balance sheet is very much tedious work. i would be thankful if some seniors/experts here can recommend a book which explains how to evaluate a balance sheet, what are the common loopholes and how to over come it in simple terms.
Diverting from book recommendation, how important is ‘Auditors comment’ in an annual report?
Hey PD,
Though not a senior or an expert, I’d recommend that you start with _Interpretation of Financial Statements _by Benjamin Graham. You should be able to find a pdf copy online. Once you are comfortable with the nuances of financial statements in general (advisable that you also focus on income statement and cash flow statement), you can pick up _Financial Shenanigans_by Howard Schilit. It’s sort of an advanced text, but has great insights. You may perhaps require some other books in between to transition from Graham to Schilit. If so, pick up a text book required for grade 11/12. If I were you, I would rather focus on building a strong foundationthan jump ships.
Not sure what you mean by common loopholes or even if I understood you question well, I’d still not be able to cover it in simple terms. As Warren Buffett has said: investing is easy, but not simple. Basically, these are numbers and they can be fudged. For example, in Satyam’s case, Raju fudged cash. Plain and simple. So, you can leave alone payables, receivables, fixed assets, and intangibles. Bottom line: Management is more important than balance sheet.
If you mean “Auditor’s Report,” I prefer to read them. Of all the companies I have researched, it was only once that the auditor had expressed an opinion that did cast a shadow on the management’s integrity. So, it wasworthit.
Hope it helps.
Raj
Rajdeep: many thanks for recommending. Financial Shenanigans in on the list already but thought to read some indian author which would give in depth insight towards Indian accounting. 11-12 grade books is surely a better idea than any other books.
Rajdeep: many thanks for recommending. Financial Shenanigans in on the list already but thought to read some indian author which would give in depth insight towards Indian accounting. 11-12 grade books is surely a better idea than any other books.
Please be responsible and ask basic queries in Investing Basics Q&A instead of starting a new thread.
