The ability to read financial statements is of vital importance to investors of all kinds. Financial statements typically include several interrelated documents, including a balance sheet, comprehensive income statement and cash flow statement. Some financial statements also include a statement of changes made to equity and management analysis. Together, these documents provide a comprehensive understanding of a company’s financial position and performance over the preceding year. Owners, managers and investors need to read and understand financial statements properly to aid their decision-making. To learn how to understand financial statements, consider reading one of the excellent books below.

The Basics of Understanding Financial Statements

The Basics of Understanding Financial Statements is a concise introduction to reading financial statements written for investors who don’t have a background in accounting. Begin by learning the basic language of accounting and finance, then continue on to learn about the details of the balance sheet, the income statement and the cash flow statement. Finally, the book demonstrates the importance of the financial statement to investors. The writer, Mariusz Skonieczny, is the founder of a successful investment management firm and author of several personal finance and investment books.

How to Read a Financial Report: Wringing Vital Signs Out of the Numbers

How to Read a Financial Report is written by John A. Tracy, a certified public accountant and an accounting professor at the University of Colorado at Boulder. This book provides another great guide to financial statements, offering a concise explanation of how investors use and understand financial statements in order to make reasoned investment decisions. Readers of How to Read a Financial Report laud the book for its clear language and explanations, which make it perfect for readers from virtually any background.

Financial Statements: A Step-by-step Guide to Understanding and Creating Financial Reports

Financial Statements is one of the most widely read introductory books on the topic. Written by business consultant and investor Thomas R. Ittelson, the book begins by introducing the language and concepts on which financial statements rely. The book then provides an in-depth description of how financial statements interrelate to form a whole.

Warren Buffett and the Interpretation of Financial Statements