The Art of Reading Financial Statements - Practitioner Level

In this video, we will start first discussing the fundamentals around corporate law and incorporation of companies as a basis to understand how consolidation of subsidiaries fully owned or not works and is eventually reflected in the financial statements.

Understanding the thought process of shareholders but also the various types of shares that exist is a fundamental element to understand also financial statements. As an example how are voting rights exerciced, why does a company speak in its financial statements of class A, B and C shares. This lecture which is still part of the fundamentals to understand financial statements will answer those questions.

Understanding potential conflicts of interest but also what the role of the board of directors is, are essential elements to read between the lines of financial statements. In this lecture I will explain the main attributes of Board of Directors and also the (cultural) differences between 1-tier and 2-tier governance models.

In this last lecture of chapter 2, I will introduce the role of the statutory auditor as an external neutral third party that should an external perspective on the company's financial statements. Their main role is to add trust & confidence for external stakeholders.

In this practice lecture, I will be showing you how to prompt VingeGPT to read the auditor's opinion and the audit fees structure for companies like Nvidia & Intel Corporation.

In this lecture we will discuss the balance sheet structure, differentiate between sources of capital (equity & debt) and how capital is transformed into assets. You will understand also the balance sheet differences between IFRS & US GAAP.

Vertical & horizontal analysis - How to capture essence of balance sheet

In this lecture, I will explain the various line items that related to equity. We will start from standard share capital and go through retained earnings, share buybacks, share issuance and also other comprehensive income. During the lecture we will practice our eye by looking at Mercedes and Kelloggs equity positions.

The lecture about debt is split in 2 parts due to its longer content. In this 1st part I will introduce debt in general as one of the 2 sources of capital (after equity) and we will together deep dive into understanding financial debt (short-term & long-term) and exercice together on companies like Mercedes, Kelloggs, China Evergrande & Bank of America. We will be discussing interest coverage ratio, cost of debt and rating agencies amongst many topics.

In this lecture, we finish discussing the main elements of debt that investors typically find in financial statements. We will discuss Accounts payable, Pension benefits, Deferred taxes, Deferred income & Operating lease liabilities.

In this lecture, I will (re)explain the fundamental elements of value creation in the context of company assets and the principles of fair valuation & going-concern before in the next lecture diving into the main types of current and non-current assets.

In this lecture, I will walk you through the main current assets being Cash & Cash Equivalents, Accounts Receivables and Inventory. For the cash equivalents we will look at the fair valuation risks of the cash equivalents by using the Level 1 to Level 3 valuation methods that were introduced in the accounting principles of fair valuation. For inventories we will discuss through various examples the valuation of inventories and the impact of potential inventory valuation adjustments (write downs).

In this final lecture of Chapter 3, I will walk you through the main long-term assets starting with Property, Plant & Equipment where we will be discussing and practicing the elements of depreciation. We will also discuss Intangible Assets & Goodwill, long-term equity investments that are NOT consolidated in the financial statements, deferred assets and will close the chapter with a conversation and interpretation about selling long-lived assets.

In this lecture, I will introduce the various items related to income/revenue and supplemental income information splitted by segment/geo/product category. We will also discuss net income/profitability and the first measures of performance by looking at the income statement.

In this lecture, we will deepen the comprehension of profitability by discussing the difference between earnings, how earnings can be potentially fictive and how cash flows are an alternative performance measure to look at company profitability. We will also discuss a very important element which is the 3 strategic capital allocation decisions that company management/Board of Directors have in relation with the profits generated from the asset base.

In this lecture, I will teach you a supplemental perspective on how to read earnings & losses being the difference between unrealized and realized gains & losses. Through the concrete example of Berkshire Hathaway I will make it tangible for you that net income/net losses are not always what they appear to be.

In this lecture, we will discuss the most important measure of corporate performance which is ROIC and also discuss cost of capital and how to determine cost of capital either for publicly listed companies or for private equity companies.

A complete example of reading IFRS financial statements with German real estate company Vonovia.

A complete example of reading US GAAP financial statements with US-based company Qurate who is mainly active in teleshopping & ecommerce.

A complete and final example of reading US GAAP financial statements with US based company Skywest Airlines. In this example I will be pushing the analysis as close as possible to my reality of reading financial statements without preparing a Powerpoint slidedeck but only scrolling and navigating together with you through their latest 10K report.

In this episode, I will walk you through the situation of Bed Bath & Beyond and its financial statements. Was the bankruptcy of the company predictable for investors ?

This is the final lecture of the training on financial statements in which I will be summarizing the main learnings of this course again.