You Only Need to Read 3 Financial Statements: A Gentle Introduction | Article Summary

"Financial statements seem kind of difficult."
This is an introductory series for those who are stuck at that point.

You don't need to read everything perfectly.
It is enough if you take away just one thing from each session.
We will look at them gently, as if giving a company a "health checkup."

What you will learn in each session

Part 1: How to Read Financial Statements | First, Look at Only 3

You don't need to overthink financial statements. First, just look at the "three": the Income Statement, the Balance Sheet, and the Cash Flow Statement. By just getting a general sense of the whole, you can see the company's health.

Part 2: Sales Exist But Nothing Remains—The "True Nature of Expenses" Seen in the Income Statement

"There are sales, but nothing is left in hand." The true nature of this lies in "expenses." We will look at the Income Statement to see how profit is created and where it decreases.

Part 3: There Is Cash But It Doesn't Feel Settled—The "Business Stamina" Seen in the Balance Sheet

"There is cash, but it doesn't feel settled." You can understand a company's "stamina" from the Balance Sheet. What it owns and how much it has borrowed.

Part 4: There Is Profit But No Money—The "Profit Trap" Seen in the Cash Flow Statement (Introduction)

"There is profit, but no money." We will look at the true nature of the "profit trap," where you are in the black but struggling, using the Cash Flow Statement.

Part 4 [Application]: How to Read the Cash Flow Statement | Understand the Company's Phase with 3 "Plus/Minus" Signs

Just by reading the "plus/minus" of those three sections, you can see in 30 seconds which phase the company is currently in (growth phase, startup phase, or caution required).

Part 5: Why Is There No Profit? — Finding "Where Profit Disappears" in the Income Statement

"There are sales, but for some reason, no profit remains." We will gently search for "where that profit is disappearing" using the Income Statement.

Part 6: There Are 3 Ways to Use Profit. Even in a Side Business, "Not Using It All" Is Effective

After making a profit, how do you use it? Divided into taxes, yourself, and the business, we explain why "not using it all = saving it" is especially effective, on the scale of a side business.

Part 7: What Is a Company That Doesn't Collapse Easily? — Will Next Month's Payments Go Through? (Current Ratio)

"Will next month's payments go through?" Even if there is profit, a cash shortage can occur. Focusing on the current ratio, we look at a company's "resistance to collapse."

Part 8: Types and Differences of Financial Statements — The 3 You Encounter in Companies, Investments, and Side Businesses

There are different types of financial statements (Companies Act, Financial Instruments and Exchange Act, and tax law). However, the format for reading them is the same for P/L and B/S. Once you can read them, you can apply that skill to your company, investments, or side business.

Part 9: What are the benefits of being able to read financial statements?

When you can read numbers, you can grasp a company's situation through its structure rather than just its atmosphere. This is the most important thing I want to convey in this series.

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