The Three Financial Statements at a Glance
Buying a stock means buying a piece of a company. So how do you know whether that company makes money well and whether its debt is dangerous? The answer is in exactly three tables: the 'financial statements.'
Financial Statements Are a Company's Report Card
Financial statements are the official reports in which a company organizes its own finances in numbers. There are several kinds, but the core three an investor must look at are:
- Income Statement: over a period, 'how much was earned and how much was spent' → profitability - Balance Sheet: at a specific point in time, 'what is held and how much debt there is' → financial position - Cash Flow Statement: 'how actual cash came in and went out' → cash-generating ability
You have to look at these three as a set to see the company's true picture. Looking at only one easily leads to a half-baked judgment.
The Three Tables Are Connected
The real appeal of financial statements is that the three don't operate separately but connect into one. The bridge linking them is 'net income.'
① The bottom line of the income statement is net income.
② The portion of this net income that isn't paid out as dividends and accumulates in the company carries over as 'retained earnings' on the balance sheet.
③ And the operating activities section of the cash flow statement starts from this net income.
In other words, the single number of net income runs through all three tables. That's why 'reading financial statements' means following this chain of connections to read the company's flow.
The income statement is 'accrual-based,' so revenue can be recorded even before cash has actually come in. The cash flow statement, by contrast, is 'cash-based' and looks only at money that actually moved. That's why you have to look at both together to catch the situation of 'profit was made but there's no cash.'
What to Look at in Each Table
At first everything looks important, but a beginner can get by with just this much:
- Income Statement → Is revenue growing? Is operating profit steady? Is it not in the red? - Balance Sheet → In the structure assets = liabilities + equity, isn't the debt (liabilities) too large? - Cash Flow Statement → Does real cash come in from operating activities? (A company that only shows profit but no incoming cash can be a warning sign.)
We'll unpack how to read each one in detail, one at a time, in separate articles.
よくある質問
Q. Where can I see financial statements?
Listed companies are obligated to disclose their financial statements. In Korea you can view business and quarterly reports for free through the Financial Supervisory Service's electronic disclosure system (DART), and in the U.S. through the SEC's EDGAR. Brokerage apps and portal finance pages also provide summaries.
Q. Just looking at the numbers, I can't tell what makes a good company.
Naturally. The numbers in financial statements aren't an 'absolute standard'; they gain meaning only when read through 'comparison.' You have to compare the same company's last year and this year, and compare it with other companies in the same industry. In this article series, you'll gradually learn comparison tools like the P/E ratio and ROE.
関連ページ
📋 結果は過去のデータに基づくものです。過去のリターンは将来のリターンを保証しません。
📋 本サービスは投資アドバイスではなく、投資を理解するための教育目的で提供されています。