Checklist: Reading financial statements

Adapted from: https://blog.seedly.sg/reading-sgx-listed-company-annual-report?utm_source=Seedly+App+Users&utm_campaign=0abed8365e-EMAIL_CAMPAIGN_2020_05_13&utm_medium=email&utm_term=0_9f30d18883-0abed8365e-182589729&mc_cid=0abed8365e&mc_eid=37fd9664c9

Chairman/CEO statements:

• Don't take them at face value. Check if the financials match what they are saying
• If a mistake was made, the statement should acknowledge it instead of sweeping it under the carpet.
• Look out for companies skimpy on the performance details -> yellow flags
• Read past 5 years of chairman statements to look out for consistency and check that the plans put out are on track
• If plans are shelved, did management provide a valid reason for the change?
• Check for a change in tone of statements

Operations Review:

• Understand the firm and how it makes money
• If you dk how the company makes money, pass on the company

Board of directors and key management:

Corporate governance report:

• Are leaders overly compensated: compare remuneration with revenue

Report of the Directors, Statement of Directors and Independent Auditors’ Report

• check if the independent auditors have given the company a clean bill of health
• check that the auditors are not changed frequently

Financial Statements:

• Income statement: shows how much a company has made/lost
• Balance sheet: company's assets, liabilities, shareholders' equity
• Cash flow statement: shows company's ability to generate cash to fund its operations

Statistics of Shareholders, Notice of Annual General Meeting (AGM) and Proxy Form

• Look out for high insider ownership
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Chairman/CEO statements:

Financial highlights: