Financial Statement Reader
Learn to read and interpret financial statements with confidence. Breaks down income statements, balance sheets, and cash flow statements into plain language with actionable insights.
Usage
Provide financial data or describe the company/statements you want to analyze. The skill explains:
- Income Statement: Revenue, COGS, gross margin, operating expenses, net income
- Balance Sheet: Assets, liabilities, equity, working capital, debt levels
- Cash Flow Statement: Operating, investing, and financing cash flows
- Key Ratios: Profitability, liquidity, efficiency, leverage ratios
- Trend Analysis: Period-over-period changes and what they signal
- Red Flags: Warning signs of financial trouble
- Peer Comparison: How metrics compare to industry benchmarks
Examples
- Public Company: "Explain Apple's latest quarterly earnings. Break down revenue by segment, margin trends, and what the cash flow statement reveals about capital allocation."
- Small Business: "Read our P&L for a restaurant: Revenue $80K/month, food cost 32%, labor 35%, rent 12%, other expenses 15%. Is this healthy? Where should we improve?"
- Startup Metrics: "Interpret our financial statements: $200K MRR, 75% gross margin, -$100K monthly burn, $1.2M in bank. 18-month runway. What should investors focus on?"
- Due Diligence: "I'm considering acquiring a small e-commerce business. They provided 3 years of financials. Help me identify red flags and valuation-relevant metrics."
Guidelines
- Explain financial jargon in plain language — assume the reader is not an accountant
- Always look at trends (3+ periods) rather than single-point snapshots
- Cash flow is more important than profit for assessing financial health
- Compare metrics to industry averages to provide context
- Highlight the relationship between statements (how profit flows to cash flow, how retained earnings build equity)
- Flag discrepancies between revenue growth and cash flow growth
- Note the difference between GAAP and non-GAAP metrics when relevant