A plain weekly letter on how to read a company’s annual report
I’m Eszter. Every Thursday I write one plain letter from Budapest on how to read an annual report: the statements, the notes and the pages most people skip. I also make checklists, worksheets and two video courses.
Latest letters
- 40
Start with the chair’s letter, then read what it leaves out
NewThe chair’s letter is the part everyone reads and the part that says least. What to look for, and what to read next.
- 39
The income statement in five lines
Revenue, costs, tax and profit: how five lines hold the whole income statement, and where the other lines hide.
- 38
Cash flow: where the money actually went
Profit is not cash. How to follow the cash through three parts of a report and see where it went.
- 37
Read the notes before the numbers
Why I turn to the notes first, and the three I read before I look at a single figure.
- 36
Red flags in the footnotes, and what they are not
Some footnotes are worth a closer read. Here is what I look for, and what is only a legal phrase.
- 35
What the word revenue is hiding
Revenue is counted when a company says it has earned it, and that can be a different day from when the money arrives.
- 34
Working capital on a morning tram
Money owed to a company, money it owes and the stock in between, drawn on one page between two stops.
- 33
How a balance sheet balances
Everything a company owns equals everything it owes plus what is left for its owners. Why that must be true.
- 32
An annual report in one evening
A plain order for reading a whole report in an evening, with a pencil, a pot of tea and no hurry.
- 31
What the auditor’s page really says
One page near the back that most people skip, and the few sentences in it that are worth reading slowly.
Shop
About me
I spent nine years in an office that read annual reports for a living, and I learned that most people stop after the chair’s letter. The rest of the report is not hard. It has an order, and once you know the order it stops looking like a wall. I started writing it down for friends who asked, and the letters grew from there.
Each letter takes one part of a report, such as the income statement, the cash flow or a footnote, and goes through it slowly with a pencil. I read printed reports on a balcony, in a reading room and on the tram, and I show my margin notes. I explain how a report is built and what its words mean.
I never say what to buy or sell, and I do not give advice about your money. What I teach is how to read, so that you can ask better questions of any report you pick up. What I sell are the checklists, worksheets and glossaries I use myself, and two video courses.