Financial analysis is powerful, but it has its limits. Figures describe the past and do not tell you everything about a company.

What the numbers do not show

• The quality of the team and of management.
• Customer satisfaction and reputation.
• Market prospects and the innovation to come.
• Any accounting arrangements that make reality look prettier than it is.

Common sense remains your best ally: a surprising figure deserves an explanation, a trend must be understood, and a single ratio neither condemns nor saves a company. Analysis guides the decision, it does not replace it.

Well done: you can now read a balance sheet, an income statement and the essential ratios. Keep your critical thinking sharp: the numbers shed light, your judgement decides.