Introduction to Financial Statements

Hello everyone,

This is my third post and it is going to be about Financial Statement .In your last session you have been presented to interpretation of the three basic financial statement .(!!! Have in mind that financial statements represent absolutely nothing if you have not looked at other indicators such as EPS, P/E , liquidity ratios,etc. i.e. you start looking at financial statement after you feel interested in the indicators that are given for it !!!)

In general ,the maim purpose of the financial statement is to represent some information about the overall financial performance of a particular company over a specific period ( i.e. either annually or quarterly). The time that normally takes for a company to publish reports is three months (quarterly).Most of the times when you are looking for those income statements , I would advise you to use finance.yahoo.com but in some cases ( in particular, small companies) , they do not report it publicly . Obviously , you are extremely interested to get to know what the income statement shows quarterly because investing in stock means that you should have some fixed target time span ( very relativistic definition ) . So , as most of the times your target time span would be somewhere around six months to one year . This implies that you need the most current information , which is quarter over quarter change .

Here is  an example with a company (ticker CYNI ) . It is a relatively small company , its market cap is 181 millions . When you try to take an income statement on yahoo finance , there is no information at all. What you can find that though,on so-called 10q and 10k( you can find it on the official sites of all the companies).
Technically speaking 10k is an annual report and 10q is a quarter report.(Note: If you see somewhere 8K , this is related to events such as acquisition of a company,bankruptcy,etc.

This is an example of income statement that is giving information for quarter data. Each company that is registered publicly traded are required to give quater data . ( U.S. securities and exchange commission)

According to U.S. securities and exchange commission , there are deadlines for submitting report . Those deadlines are defined by how huge the market cap of a company is . For the three different categories :

	Revised deadlines
Category of Filer	Column2	Column1
	Form 10-K Deadline	Form 10-Q Deadline
Large Accelerated Filer($700MM or more)	60 days	40 days
Accelerated Filer($75MM or more and less than $700MM)	75 days	40 days
Non-accelerated Filer(less that  $75MM)	90 days	45 days

One more important point that I'd like to make is that , even if you do not find the financial statements that you need on e.g. finance.yahoo.com you can still find reports on U.S. Securities and Exchange site.

On the next post , I will comment specifically about each of the three main types of financial statement :

1) Income statement 

2) Balance sheet 

3) Cash flow 

Links that you will find helpful:

• More on the deadlines for publicly traded companies ( Have in mind that this is only true for the U.S. market) http://www.sec.gov/answers/form10q.htm
• 10q reports for ALL COMPANIES ON U.S. MARKET ( really important for 10q of those small companies that you cannot find ): http://www.sec.gov/edgar/searchedgar/companysearch.html