Reading Financial Statements
authorized shares VS outstanding shares
authorized = can issue
outstanding = has issued
common shares VS preferred shares
common = dividend + voting
preferred = priority dividend + no voting
par value VS contributed surplus
share price = par value + contributed surplus
significant accounting policies
one of the most important financial statement notes
- accounting standards used
- ammortization rules
- inventory valuation methods
- ...
common size income statement
income statement / total net revenues
Q1 (first quarter)
Jan 01 - Mar 31
Q2 (second quarter)
Apr 01 - Jun 30
Q3 (third quarter)
Jul 01 - Sep 30
Q4 (fourth quarter)
Oct 01 - Dec 31
contents of an annual report
1. Letter to shareholders
2. Business description
3. MD&A
4. Risk management
5. Audit report
6. Financial statements
7. Notes
8. EPS
9. Directors/Executives