Company Financial Statements

Company Financial Statements

Company Financial Statements: How to Read the Page

What it does

Every U.S. listed company files an annual report, Form 10-K, with the Securities and Exchange Commission (SEC). The report holds three financial statements, and each number in them carries a machine-readable tag (the XBRL format) that says what it is: "Revenues", "NetIncomeLoss", "Assets". This page reads those tagged numbers for one company, sorts them into about forty standard lines, and sets ten fiscal years side by side. It then shows the same table in two other forms (as percentages of a base, and as growth from the year before), a few ratios, two compound growth rates worked out step by step, two charts, and the filing each year was taken from. It describes what the company reported. It does not say whether the company or its shares are good or bad.

The numbers come from a copy of the SEC's public data held on this site: the larger U.S. companies that file Form 10-K, and the foreign companies among them that file Form 20-F or 40-F with machine-readable statements (under U.S. accounting rules or IFRS, each in its own currency), up to twelve fiscal years each. Nothing is fetched from the SEC when you open the page.

The method

The three statements. The income statement covers a year: revenue (sales), less the costs of earning it, down to net income (profit). The balance sheet is a snapshot on the last day of the year: assets (what the company owns), liabilities (what it owes) and shareholders' equity (the difference), so that assets = liabilities + equity. The cash flow statement covers the year again, but counts cash that moved, not profit that was earned: cash from operating the business, cash invested (mostly capital expenditures on buildings and equipment), and cash exchanged with lenders and shareholders (financing).

Values. US dollars as filed, shown in millions; per-share lines in dollars; share counts in millions. Costs, capital expenditures, dividends paid, share repurchases and debt repaid are positive numbers. The three cash-flow totals carry a sign: negative means cash went out.

Common size. Each money line divided by a base of the same year:

income statement and cash flow statement: line_t / revenue_t
balance sheet: line_t / total assets_t

This removes size, so a year can be compared with another year, or a company with a larger one. Reading down the income statement, the percentages are the cents of each sales dollar that went to each cost and what was left. Per-share lines and share counts have no common size and are left out of that view.

Growth. growth_t = value_t / value_t−1 − 1, the change from the fiscal year before. The cell is blank when either value is blank or the earlier value is zero or negative: a profit of 50 after a loss of 10 is not "−600 %" in any useful sense.

Key figures. With NI net income, R revenue, E shareholders' equity, A total assets, and a bar for the average of the year's opening and closing balance:

gross margin = gross profit / R, operating margin = operating income / R, net margin = NI / R
free cash flow FCF = cash from operating activities − capital expenditures; free cash flow margin = FCF / R
return on equity ROE = NI / Ē, return on assets ROA = NI / Ā (the closing balance alone when the year before is not on file)
total debt = short-term debt and current maturities + long-term debt
net debt = total debt − cash and cash equivalents − short-term investments
debt to equity = total debt / E

ROE and debt to equity are left blank when equity is zero or negative (a company that has bought back more shares than it has retained in profit), because the ratio then has no meaning.

Compound annual growth rate (CAGR). The one yearly rate g that carries the first value V₀ to the last value V_n in n years, V_n = V₀ (1 + g)ⁿ:

g = (V_n / V₀)^1/n − 1

The page computes it for revenue and for diluted earnings per share (EPS), from the oldest year available (up to ten years back) to the latest. Both end values must be positive.

Currency. Every figure is in the currency the company reported that year: US dollars for most, euro, yen, pounds, Canadian dollars and others for foreign companies that file Form 20-F or 40-F. Nothing is converted, and where a foreign company prints a US-dollar convenience translation beside its own figures the page shows its own currency. The table captions name the currency. A company that changed its reporting currency keeps each year in the currency of that year, and the page says so, because amounts and growth rates across the change are not comparable. Companies that report under IFRS are read from the IFRS tags; IFRS prescribes no gross profit or operating income line, so those rows are filled only where the company tags them. Per-share figures of foreign companies are per ordinary share, not per American depositary share.

Last twelve months. Where a quarterly report later than the last fiscal year is on file, the income and cash-flow tables carry one extra column, "Last 12 months to" the quarter's date, and the balance sheet one column, "Latest quarter". A twelve-month flow figure is the last fiscal year, plus the year to date in the latest quarterly report, less the same year-to-date period a year before: LTM = FY + YTD − prior YTD. The column is not a fiscal year and rests on unaudited interim reports, so it is set apart, left out of every growth rate and of the charts, and blank in the growth view. A twelve-month revenue outside half to twice the last fiscal year is withheld, as are per-share figures when the share count has moved by more than 40 % since the annual report (a split). When the latest report is the annual report the last twelve months are that fiscal year and no column is added. Companies that file no quarterly reports in machine-readable form, which is most foreign companies, have no such column; it is never estimated.

Stock splits. In a 4-for-1 split every share becomes four and EPS falls to a quarter, with nothing changed in the business. Filings state EPS on the share count of their own time, so the raw figures before and after a split cannot be compared. Per-share figures and share counts on this page are adjusted for stock splits detected from the companies' restated figures; as-filed values are in the filings. The detection uses the filings themselves: after a split the next annual report restates its comparison years, so the same year is on file twice, as first stated and as restated. When the weighted share count of that year rises by a usual split ratio (2, 3, 4, 10, 20 and so on, or a stock dividend) and its EPS falls by the same ratio, the ratio is taken as a split and every older year is multiplied through. A change in the share count that EPS does not mirror, as in a merger, is not a split. Where the restated figures do not decide the matter the years are left as filed, the page says so, and the per-share growth of those years is blank.

What it assumes

• That the company used a standard tag for the line. A line under a company-specific tag is not found and stays blank. Blank never means zero.
• That one tag means the same thing at every company. It nearly does for revenue, net income, total assets, cash, equity and the cash-flow totals. It does less well for debt, where companies split borrowings over many tags and the data reads only the main ones.
• That the latest number filed for a year is the best one. Each later annual report repeats earlier years as comparatives, sometimes restated. The balance sheet of a year is taken whole from the latest report that shows it; income and cash-flow lines keep the latest value line by line, and the table of filings shows when a later report was used.
• A fiscal year is labelled by the calendar year in which it ends.

When it misleads

• Debt and net debt can be too low, because part of the borrowing (finance leases, a financing subsidiary, a current portion tagged only by segment) may sit under a tag the data does not read. Net debt also ignores long-term investments, which for some companies are large.
• Banks, brokers and insurers do not have cost of revenue, gross profit, inventory or current assets, and their "revenue" is whatever total they tag, sometimes net of interest expense. Their debt ratios say little, since deposits and policy liabilities are not counted as debt.
• Share counts: shares outstanding is unreliable for companies with several classes of shares, and a few companies tag share counts in thousands or millions instead of units.
• A column can mix restated and original figures, so now and then total assets and total liabilities and equity of one year differ. The page names the years where they do.
• Tagged totals are not adjusted. One-time gains and charges, acquisitions and accounting changes are all inside the reported numbers. A jump in a margin or a growth rate may be one of these and not a change in the business.
• A CAGR sees only two years. Start it in a weak year and it looks high; the yearly growth view shows the path between.
• Common size hides size and growth hides level. Read the three views together.
• The data is refreshed from time to time, not daily, and covers annual reports only (no quarters). For anything that matters, open the filing: the link is in the table of sources.

Worked example

Apple Inc., fiscal year ended 30 September 2023, from the Form 10-K filed 3 November 2023 (US$ millions). The page shows the same numbers in its 2023 column.

Revenue 383,285 (2022: 394,328; 2021: 365,817); net income 96,995; research and development 29,915; cash from operating activities 110,543; capital expenditures 10,959; shareholders' equity 62,146 (2022: 50,672); commercial paper 5,985, current term debt 9,822, non-current term debt 95,281; cash 29,965; current marketable securities 31,590.

Common size: net income / revenue = 96,995 / 383,285 = 25.3 %; research and development = 29,915 / 383,285 = 7.8 %.
Growth: revenue 383,285 / 394,328 − 1 = −2.8 % (the filing prints "(3) %").
Free cash flow = 110,543 − 10,959 = 99,584.
ROE = 96,995 / [(62,146 + 50,672) / 2] = 96,995 / 56,409 = 171.9 %. The figure is this high because repurchases have reduced equity to a small base, which is what the ratio measures here, not only profitability.
Total debt = 5,985 + 9,822 + 95,281 = 111,088; net debt = 111,088 − 29,965 − 31,590 = 49,533. Apple also held 100,544 of non-current marketable securities, which this definition does not subtract.
Two-year revenue CAGR, 2021 to 2023: (383,285 / 365,817)^1/2 − 1 = 1.04775^0.5 − 1 = 2.36 % a year, although revenue rose 7.8 % in the first year and fell 2.8 % in the second.

A calculator for education and analysis, not investment advice.