Company Accounts
What happens in the accounts when inventory loses value?
Read an inventory write-down as a valuation change, then check the company’s explanation before assuming the stock was sold or discarded.
MODELS · PROCESS · PEOPLE
financial statements
Understanding Companies
Goodwill in company accounts is not a score for the brand’s reputation
Acquisition goodwill is an accounting amount, not a customer-satisfaction score. Read the business-combination note to understand where the figure comes from.
Reading Company Accounts
A Provision Records an Uncertain Obligation, Not a Spare Cash Account
An accounting provision recognises an uncertain liability. It does not necessarily mean the company has placed an equal amount of cash in a separate account.
Company Accounts
Depreciation Spreads an Asset’s Cost Across Accounting Periods
Depreciation allocates an asset’s depreciable cost over its useful life. A simple example separates accounting expense from the original cash payment.
Company Fundamentals
Gross Margin and Net Margin Tell Different Parts of a Company’s Story
Calculate gross and net margins from the same period, then use the gap to ask better questions about a company’s costs and reporting.