Stock Market investment: Practical Accounting

Learn practical accounting for stock investors by combining technical and financial analysis to read profit and loss, balance sheets, and cash flow statements, including depreciation, and what shareholders own.

Explore how a supermarket buys from suppliers, displays goods in a retail store, and collects payment from customers, then shows how cash flows cover costs and what's left for shareholders.

Explore how a shoe factory operates from production to distribution, detailing raw material costs, labor, and retailer sales, and explain how cash flow and shareholder value arise.

Explains the shipyard business, showing how cash from ship orders flows to the company while costs for raw materials, labor, facilities, and shareholder returns arise.

Identify the three core elements of a generic business: cash from customers, costs of doing business, and the remaining amount for the shareholder. Learn how these drive accounting.

Learn how the profit loss statement reports revenue, cost of goods sold, and gross profit in a supermarket business, showing cash flow to shareholders.

Explore what counts as expenses, from cost of goods to distribution and selling expenses, and learn how transport, rent, marketing, and salaries shape a company's costs.

Learn how depreciation expense spreads the cost of a machine over its ten-year useful life, illustrating accrual accounting and its impact on profit and balance sheet.

Learn how to classify interest expense as financing and non-operating, distinguish operating versus non-operating costs, and depreciate or amortize capital expenditures on machines over their useful life for accurate accounting.

Explore how a supermarket tracks revenue, cost of goods sold, gross profit, operating and non-operating expenses, taxes, and net profit, plus insights on comprehensive income and consolidated statements.

Learn to read a consolidated income statement for 2013, identify revenue, cost of sales, operating vs non-operating items, and profit before tax and comprehensive income.

Explore the balance sheet by explaining assets and liabilities, including current assets such as cash and inventory, and current and long-term liabilities like suppliers, salaries, taxes, bank loans, and bondholders.

Learn how a sale on credit creates accounts receivable for the seller and accounts payable for the buyer, shaping the balance sheet as cash flows and timing affect profit.

Understand how the balance sheet shows assets minus liabilities to reveal equity, or book value, the shareholder's residual interest.

Differentiate tangible and intangible assets, including trademarks, customer relationships, software, and fishing rights, and explain why goodwill arising from acquisition requires careful valuation.

Learn how goodwill forms in acquisitions when buyers overpay, paying cash for a company's equity and assets, and how this overpayment affects equity valuation.

Deduct intangible assets to reveal net tangible assets and tangible equity, safeguarding against overpaying for goodwill and other assets with uncertain future value.

Discover how the balance sheet links to profit and loss, showing how profits increase equity and assets while losses reduce them and liabilities stay the same.

Learn how capitalization of assets puts equipment on the balance sheet, then depreciates it over its 10-year useful life, spreading expense and discussing potential misuse to hide losses.

Examine how some firms capitalize losses to delay expenses, hide losses as hidden assets, and depreciate them over years to report higher profits to shareholders.

Learn to read a balance sheet by identifying assets, liabilities, and equity, with emphasis on current versus non-current items like cash, inventories, accounts receivable, and tax payable.

explain how the cash flow statement works, why cash matters, and how the three sections—operating, investing, and financing—show how profit becomes cash.

Analyze cash flow from operating activities, showing how paying employees and liabilities on the balance sheet, inventory sales, and the pattern of positive and negative cash flow influence profits.

Explore investing activities by showing how buying assets like a machine causes negative cash flow and selling assets like a factory causes positive cash flow.

Analyze financing activities by tracing cash changes from bank loans and shareholder funding, noting that borrowing increases cash and liabilities, while repaying debt or returning funds decreases cash.

Investors should focus on cash flow from operations, most important section of the cash flow statement, as it reveals core business health; financing cash flow can be boosted by borrowing.

Explore the challenges of deriving operating cash flow from net profit, adjusting for noncash items such as depreciation and amortization and changes in working capital, using a simple comparison approach.

Learn to read the cash flow statement, focusing on operating, investing, and financing activities, and gauge core business health by comparing cash flow to profit.

Study accounts receivables and payables and how a purchase transfers the asset to receivables, affects cash flow, and reveals the 'dark matter' in cash flow.

Explore asset appreciation and its impact on the profit and loss statement, balance sheet, and cash flow, and how selling assets shifts from operating to investing sections.

Learn how asset devaluation affects balance sheets and cash flow by valuing an asset after depreciation, recording loss, and recognizing cash proceeds from sale.

Depreciation reduces the balance sheet asset by $10 to $90 and remains a non-cash item that does not affect operating cash flow or the cash flow statement.

Explore doubtful debt and provision for bad debt, recognizing uncollectible accounts receivable and recording the resulting loss on the balance sheet and the profit and loss.

When you purchase inventory, it becomes an asset on the balance sheet and does not affect profit and loss; cash outflow lowers cash flow, and unsold inventory may incur losses.

Explain how a dead inventory write-off removes unsellable stock from the balance sheet, recognizes a loss, and shows no cash flow impact in financial statements.

Understand the difference between profit and cash flow, noting profit reflects past and future earnings while cash flow records actual cash movements, which investors use to judge the company.

Identify assets by their ability to generate future economic benefits and be objectively measured, such as buildings or machines. Some items, like customer relationships, are intangible and harder to quantify.

Learn how revenue recognition works, including when a purchase order exists versus when delivery occurs, and why revenue is recognized after delivering the machine to the customer.

Learn the difference between capitalizing a machine and expensing a service, and how depreciation versus immediate expense affects the balance sheet and profit or loss.

Analyze Boeing’s financial statements, including the profit and loss, balance sheet, and cash flow statement, to understand operating, investing, and financing activities and their impact on net profit.

Analyze Starbucks' revenue structure, cash flow from operating activities, and balance sheet to understand how operated and licensed stores, debt, and dividends and stock repurchases affect net profit and equity.

Explore the three financial statements, income statement, balance sheet, and cash flow statement, and learn how revenue, expenses, and taxes shape profit, assets, liabilities, and shareholder equity.