Interpreting company reports and accounts

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10. Conclusion

• Reports and accounts are important tools for all investors, not just professionals who have formal training in securities analysis. Don't be intimidated by them.
• 50% of what can be learned from reports and accounts requires only common sense and the ability to divide and multiply one set of numbers by another.
• Think about a company's business before looking at the numbers. The figures you get when you do your ratio analysis only mean something in the context of the company's business.
• Consider the 5 components - directors report, P&L, balance sheet, cash flow statement and auditors' report - as pieces of the jigsaw. Only by understanding how they relate to each other can you see the full picture.
• Be careful not to place too much reliance on results of your analysis. Apart from the problem of creative accounting, there may be accounting peculiarities that you have not noticed.
• Check the figures that you get against figures produced by REFS and The Estimate Directory to make sure you are on the right track.

You have now completed the course. To test your knowledge, take the Assessment test.

1. The five main components of a set of report and accounts 2. What to look for in the directors' report 3. What to look for in the P&L 4. Earnings per share (EPS) 5. Price earnings ratio (P/E) 6. What to look for in the balance sheet 7. What to look for in the cash flow statement 8. What to look for in the auditors' report 9. Other information sources 10. Conclusion