One of the most useful subjects to understand as an investor is financial accounting. It's not the most exciting topic, but it can make reading financial statements a lot more fruitful. With accounting concepts under your belt, you may be able to spot red flags in balance sheets and income statements before most investors do. Consider taking a course or two in accounting at a local college to boost your accounting knowledge. You can learn a lot about accounting from books, too. Consider John Tracy's How To Read a Financial Report. You'll learn a lot about financial statements in general in Analysis of Financial Statements by Leopold A. Bernstein.
Just to get a taste of the kinds of insights you'll get, check out this Richard Gibbons article, "Profit from Panic," where he addresses the accounting of firms such as General Motors (NYSE:GM) and Delphi (NYSE:DPH). In this article, Dan Bloom dug into the accounting reports of Dell (NASDAQ:DELL).
If you don't have the time or fortitude for a college course in accounting, you can learn more about how to interpret financial statements in our "Crack the Code: Read Financial Statements Like a Pro" online seminar. Give any of our how-to guides a whirl. More than 90% of the people who've taken them have consistently given them high marks. Besides, we offer a money-back guarantee if you're not satisfied. What do you have to lose, except your fear of financial statements?
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