Your starting question
What do the numbers really tell us?
Reported profit is a starting point. Follow the links between performance, cash and financial position, then test the assumptions behind a forecast.
By the end: Connect Harbour’s three statements and produce a forecast with a defensible downside.
Try the short baseline. Identify what you need to investigate.
Use diagrams, worked examples and regular choices with feedback.
Work the case in your companion workbook and discuss the trade-offs.
Complete the review and record what changed your mind.
2.1 · Financial Statements
Find the source
Financial Statements · the work you will do
- 1Find the source
- 2Read the profit
- 3Follow the cash
- 4Test the forecast
Video coming soon · about 1 minutes
Welcome to Financial Statements
Use the narration below while the recording is being made, then try the decisions in this lesson.
Read the full narration
Welcome to On Judgement. In Financial Statements, we will follow four connected steps. Find the source. Then Read the profit. Then Follow the cash. Then Test the forecast. You do not need to know the answers before you start. Make an initial choice, read or watch the explanation, and use the feedback to reconsider. A mistake is useful when you can explain what it revealed. Work on the cases independently or discuss them with your club. Keep longer written responses for the parts where you need to make an argument of your own. By the end, use the evidence and calculations to explain a decision and what could change it.
Investing Skills · Module 2.1
Understand what the numbers reveal.
Read company accounts, follow profit into cash, assess performance and build an evidence-based forecast.
How to use this module
Work through eight lessons in order, independently or with your club. Each has an opening question, explanations, a worked example, three activities, jargon and five practice checks. Choose an answer on the page, read the feedback and try again where needed. Use the practice lab to rebuild the case, then complete the review and committee note. Allow approximately 6–9 hours including discussion and model work; adjust with your teacher.
- 2.1.1 Reading Financial Statements: Part 1
- 2.1.2 Reading Financial Statements: Part 2
- 2.1.3 The Income Statement: Part 1
- 2.1.4 The Income Statement: Part 2
- 2.1.5 The Cash Flow Statement
- 2.1.6 The Balance Sheet
- 2.1.7 Connecting the Three Statements
- 2.1.8 Forecasting the Income Statement
Before you start · five baseline questions
2.1 Financial Statements
Read company accounts, follow profit into cash, assess performance and build an evidence-based forecast.
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Explain why investors use company accounts.
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Locate the three statements and their notes.
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Build a bridge from revenue to profit.
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Calculate growth, margins and selected performance ratios.
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Explain why profit and cash differ.
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Classify assets, liabilities and equity.
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Link profit, cash, PP&E, debt and equity roll-forwards.
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Build revenue and cost assumptions from business drivers.
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Practice lab · Financial Statements
Rebuild the Harbour case, inspect control totals and practise your committee note.
Rebuild the Harbour case, inspect control totals and practise your committee note.
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Module 2.1 review and final assessment
Twenty questions and an original 15-mark committee case with a balanced-judgement rubric.
Twenty questions and an original 15-mark committee case with a balanced-judgement rubric.