read a financial statement

financial illiteracy is expensive

most people hand their money to someone else to manage because they never learned to read the scoreboard. a financial statement is just a scoreboard. it tells you whether a company is winning or losing, growing or dying. and once you can read it, you'll never look at money the same way.

the two statements that matter

the balance sheet is a snapshot of what a company owns vs what it owes at a specific moment. assets on one side, liabilities on the other. the difference is equity — what the company is actually worth. if liabilities exceed assets, the company is technically underwater.

the income statement (also called profit & loss) shows how much money came in, how much went out, and what's left over a period of time. revenue minus expenses equals profit. simple math, massive implications.

what to look for

once you understand the basics, start asking the interesting questions:

• is revenue growing year over year, or is it stagnating?
• are profit margins expanding or shrinking?
• is the company taking on more debt than it can handle?
• does it have enough cash to survive a bad quarter?

these questions separate informed investors from people who buy stocks based on reddit posts.

the exercise

go to any public company's investor relations page. pull up their latest annual report. find the balance sheet and income statement. spend 30 minutes just reading the numbers and trying to understand the story they tell.

then do something fun: try to find one company that looks undervalued (solid fundamentals but low stock price) and one that looks overvalued (weak fundamentals but high stock price). you'll be shocked at what you discover.

why everyone should learn this

even if you never buy a single stock, financial statement literacy helps you evaluate employers, negotiate salaries, start businesses, and understand the economy. it's a life skill disguised as a finance skill.

stop being financially illiterate. the information is free. the ignorance is costly.

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