Investors would do well to develop a solid understanding of the "business model" concept as they evaluate potential investments.

A firm's business model is simply the method by which it makes its money. Some examples: Part of Wal-Mart's (NYSE:WMT) business model was initially to establish profitable stores in small communities that other discount chains had dismissed. (It's now establishing itself even in large cities.) Coca-Cola's (NYSE:KO) business model involves using its secret formula to manufacture syrup that it supplies to bottlers. By distributing its beverages through stores, restaurants, vending machines, and more, it's attempting to make its drinks easily available to anyone.

Online marketplace eBay's (NASDAQ:EBAY) business model is to connect individual buyers and sellers through a website, and to profit by charging fees and by taking a percentage of each sale -- all this without carrying any inventory. Fellow online commerce enterprise (NASDAQ:AMZN) has a different model, which requires it to keep many products in stock, so that they can be quickly shipped out to customers. Barnes & Noble (NYSE:BKS), like Amazon, sells many books, but it does so largely through a long chain of brick-and-mortar stores -- representing yet another business model, one with higher overhead costs.

You can learn all about how to interpret financial statements in our Reading Financial Statements discussion board.

To learn more about how to make sense of financial statements in our "Crack the Code: Read Financial Statements Like a Pro" how-to guide (also known as an online seminar). Give any of our how-to guides a whirl. More than 90% of those who've taken them have consistently given them high marks -- and besides, we offer a satisfaction guarantee, or your money back.

Coca-Cola is a Motley Fool Inside Value recommendation. eBay and are Motley Fool Stock Advisor recommendations.

If you're interested in receiving a handful of promising stock and mutual fund ideas each month, check out our suite of investing newsletters.