Quarterly reports: how to read

What is a quarterly report? (10Q)

The quarterly report or 10Q shows a company’s earnings, cash flow and income (or loss) for a specific quarter. In one business year, a company states four quarterly reports and one annual report (10k).

The main parts of a Quarterly report are:

The balance sheet

The balance sheet shows the investor what the company owns and what it owes at the date of the report. The balance sheet is divided into two halves; Assets, Liabilities and shareholders equity.

The two halves will and should always be in balance. Because every dollar worth of assets is or has either be financed by shareholders or by debt (= liabilities).

In-depth analysis of the balance sheet you find here. 

Knipsel

The income statement

The income statement tells the investor how much the company earned or lost during the year (or quarter).

An income statement matches all the revenues earned from its operations or from other activities, against all costs and expenses incurred in the operation of the company. The difference between the revenues and the costs is the net income (or loss) for the year (or quarter).

In-depth analysis of the income statement you find here.

Knipsel2

The cash flow statement

The cash flow statement shows the cash inflows and outflows of a company during a reporting period.

Cash flows are related to net income but are not equal to it. This results from the accrual method of accounting. Accrual accounting recognizes a transaction on the income statement when the earnings process is completed. This means when the goods or services have been delivered or the expenses incurred. This does not necessarily coincide with the time that cash is exchanged.

In-depth analysis of the cash flow statement you find here.

Knipsel3

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