What are some methods of analyzing financial statements?

Analyzing financial statements can accomplished from so many angles. I guess the first thing I would do is decide what I am looking for. Do you want to see the profit and lost of the company?

Do you want to compute percentages? Do you wish to see all your expenditures or the income you earned? And what type financial statement are you referencing?

This is not meant to be a derogatory response but one that says a financial statement can tell you almost anything you want to know about a business or individual's financial situation. Even a tax return is a type of financial statement.

I don't believe this is too vague a question. The income statement, the balance sheet and the statement of cash flows are the critical, 10-K required statements. Focus on these.

I'm guessing the purpose of the analysis is for one of three things, investment purposes, the general health of a company perhaps as a prospective employee or perhaps looking for signs of fraud.

Some basic methods are ratio analysis, solvency or liquidity analysis, margin analysis, regression analysis of stock price and price to earnings. Use tools like why-why and SWOT. Compare the company to its peers on assets, debt ratio, market share and margin.

When looking at financial statements, the best advice I can offer is try to understand the business model, then see if the numbers reflect those goals.

Agreed. Too vague a question. It would be kind of like asking, "What kind of car should I buy?

The purpose of the analysis needs to be clear.

The answer could sound very funny to some and very interesting to some others, besides there are so many angles involved in to this that an answer would satisfy none.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.