7 FINANCIAL STATEMENT SECRETS

Why Financial Statements Matter

Successful investors look beyond headlines and share prices. Financial statements reveal how a company actually makes money, manages risk, and generates cash. Understanding a few key metrics can dramatically improve investment decisions.

1. Revenue vs Cash Flow

Revenue shows sales, but not all revenue becomes cash. Always check operating cash flow to confirm real money is coming into the business.

2. Profit vs Quality of Earnings

Net profit can include one‑off gains or non‑cash items. Compare profit with operating cash flow to judge earnings quality.

3. Balance Sheet Strength

A strong balance sheet includes manageable debt, healthy cash reserves, and sustainable liabilities. Look beyond headline debt to leases and other obligations.

4. Free Cash Flow

Free cash flow represents cash left after maintaining the business. Strong free cash flow supports dividends, reinvestment, and stability.

5. Share Dilution

When companies issue new shares, existing investors own a smaller portion. Monitor shares outstanding and earnings per share trends.

6. Red Flags to Watch

  • Rising inventory without sales growth
  • Large goodwill balances
  • Increasing debt
  • Frequent capital raisings
  • Negative operating cash flow

7. How to Read Results Season

  • Revenue growth
  • Earnings quality
  • Cash flow
  • Debt levels
  • Outlook statements

Which statements do you need to look at?

  • Annual Report (Full Financial Statements)
  • Half-Year Report (Interim Results)
  • ASX Results Announcements (Most Traders Start Here)
  • Investor Presentations


Here is how to find everything quickly
Check out the guides below on how to view the company information in the Trade for Good software.

Company Statements

Trade for Good Web
To view the Company Statements, click on the 3 horizontal lines in the top left corner.
In the drop-down menu, hover over Fundamentals, then click on Statistics.

Then search for the company fundamentals. For the individual Company Statements that are released, look at the News guide for Price Sensitive announcements.

Video: https://youtu.be/0sP1hNB3Eto

Company News

Trade for Good Web
To view the Company Statements, click on the 3 horizontal lines in the top left corner.
In the drop-down menu, hover over Market Analysis, then click on Market News.

To view only the Price Sensitive news in the top right corner of the News widget, click on the 3 dots, then in the drop-down menu select Price Sensitive.

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What ASX Traders Actually Check

Here’s the real workflow most smart retail investors use:

Step 1 — ASX announcement
Read the results headline

Step 2 — Investor presentation
Understand story

Step 3 — Annual or half-year report
Check the real numbers:

  • cash flow
  • debt
  • shares on issue
  • margins

The Bottom Line

Financial statements can provide a valuable insight into the workings of company, using the financials can provide you and an investor checklist, which can help you make informed decisions.

Investor Checklist

Before investing, ask:

  • Is the company generating real cash?
  • Is debt under control?
  • Are profits consistent?
  • Is management transparent?
  • Does the business have a durable advantage?

What you learn here has been used in our Trade for Good software.
Click on the button to find our software education videos.

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