What is Financial Literacy and Why Should You Care

Alan Greenspan, the Chairman of the U.S. Federal Reserve from 1987 to 2006, highlighted the predominant issue in today's generation and economy as the deficiency in financial literacy.

The Value of Speaking the Business Language

In the business world, it is essential to communicate effectively. Whether involved in sales, marketing, manufacturing, purchasing, accounting, or finance, proficiency in the language of business is crucial. Whether one owns a small business, embarks on an entrepreneurial venture, seeks career advancement through business education, or provides professional services to businesses, fluency in the language of business leads to enhanced credibility, improved decision making, and greater success.

Significance of Financial Statements in the Modern Context

The language of business finds its expression in financial statements, which serve as a comprehensive evaluation of a company's performance. Over time, these statements offer a historical perspective on the business's trajectory and act as a benchmark for managerial assessment and investor decision making. Notably, the accountability of individuals in the business realm regarding their financial practices has heightened since the occurrences involving Enron and WorldCom, accentuating the necessity for a thorough understanding of financial statements.

Emphasizing the Interpretation of Financial Statements

Similar to driving a car without needing to understand its manufacturing process, the ability on how to read financial statements does not necessitate expertise in bookkeeping. A course that focuses on financial statement interpretation, rather than their preparation, alleviates the burden of bookkeeping and concentrates on comprehending the end product of financial accounting. This educational approach aims to guide learners through the analysis of real company financial statements (such as those of Whole Foods, Sherwin Williams, and Facebook) in a progressive manner, supplemented with pertinent accounting terms and concepts to foster proficiency.

Here's an overview of what we'll cover in this course:

Understanding Financial Statements

Explaining the components of financial statements such as the balance sheet, income statement, and cash flow statement, and highlighting their differences.

Analysis of Whole Foods' Financial Statements

Examining the key line items on Whole Foods' balance sheet, income statement, and statement of cash flows.

Fundamentals of Accrual Accounting

Exploring basic accounting concepts, the limitations of measuring profits with cash, and the necessity of separate statements for income and cash flow.

In-depth Analysis of Sherwin Williams' Financial Statements

Understanding the meaning of each line item on Sherwin Williams' balance sheet, income statement, and statement of cash flows.

Application through Facebook Case Study

Participating in a 28-question quiz about Facebook's financial statements (balance sheet, income statement, and statement of cash flows) with feedback.

Utilizing Ratios for Analysis

Learning how to interpret financial data using four key ratios: return on equity, profit margin, asset turnover, and financial leverage. This includes computing these ratios for Sherwin Williams and comparing financial statements across different industries.

The course consists of 20 videos, each ranging from three to eight minutes in length. Additionally, it includes a case study focusing on Facebook.

The total duration for completing the course, including watching the videos and completing the Facebook case study, is estimated to be 100 minutes.

Are you prepared to begin? Let's get started!

1. Business students who want a big picture view of accounting by understanding the end product, financial statements, not how the end product is created through bookkeeping
2. Managers who want to read and understand financial statements without learning bookkeeping
3. Investors who want to read and understand annual reports and 10Ks
4. Non-accounting/finance employees in companies who want to determine how their company is doing without taking an accounting course

1. Clear and comprehensive instruction all the way through the units. Case study is great to test your knowledge and apply lessons learnt. Overall excellent course ~ E Lozano
2. This is a good course for me. I am not an accounting professional but need more foundation on financial statements to assist in my role ~ R Schelin
3. Highly recommend this course. The lectures are well put together and the instructor answers your questions very clearly ~ Alexander
4. For a beginner like me, this course was very insightful, easy to follow and clear explanations & definitions ~ K Walters
5. Enjoyed the flow and level of details. Company examples were great choice ~ Hana H
6. Excellent course. Everything was explained chronologically and progressively to further build and cement understanding of the material. You can tell the instructor has been a professor for a very long time and understands how to structure a course for optimal information retention. I feel as if I have a much stronger grasp of corporate financial concepts ~ TiRyan J
7. The course was amazing. I wanted to learn how to read financial statement because I want to start a business at a young age and this course taught me to to read financial statement. It makes sure that you're learning module after module ~ J Padillo
8. I really enjoyed this course. The material was presented in a format that made it easy to understand and quite interesting. The instructor conveys the information in clear, concise language with great slides to improve the student's grasp of key elements. I would highly recommend this course for anyone that wants to get a fundamental understanding of financial statements, the components that make up the income statement, the cash flow statement and the balance sheet and how the various data relate to each other. Well worth the time and money invested ~ Russell V
9. I have been pleasantly surprised by the course. I see great practical value in being able to read the 3 financial statements as well as dig deeper into the statements to understand the innerworkings and the relationships between numbers that tell how a company is doing. It was well worth the time, effort, and cost I paid ~ M Crouse
10. By far THE BEST course on learning how to read and understand financial statements! The instructor makes it so easy to understand and follow! Easily the best course I’ve ever spent money on and it’s worth every penny! Thank you! ~ K Yap
11. This course was a good primer for learning how to read Financial Statements. I walk away after a few hours of instruction with some great tools to help me understand how to determine the health of a business by looking at just a few key ratios. I look forward to looking at more advanced courses on reading financial statements. Well worth the time if you have little to no experience with financial statements ~ Danilo T
12. This is one of the best courses out there on understanding financial statements. I am an entrepreneur and an investor and I loved the course because whatever the professor taught me hit home and will be invaluable for me in terms of knowledge! ~ Yasir K

1. Explain how the balance sheet, income statement, and statement of cash flows are used, what they measure, and why we need three statements. 
2. Differentiate between income and cash flow
3. Explain what is the balance sheet equation and why the balance sheet equation is the foundational model for accrual accounting/double entry accounting
4. Define what are assets, liabilities, and equity and how assets, liabilities, and equity relate
5. Explain how the statement of cash flows and income statement link into the balance sheet
6. Explain how accounts work like buckets
7. Locate a real company’s annual report at their website and locate their financial statements within the annual report
8. Explain who are the six most important stakeholders of a corporation (employees, customers, government, vendors, lenders, investors)
9. Explain the give and take of a transaction and how to record both sides of the transaction separately with the six stakeholders
10. Explain what each line item of the balance sheet means and distinguish between current assets, non-current assets, current liabilities, non-current liabilities, and shareholders’ equity
11. Explain which side of the give and take appears on the income statement and on the statement of cash flows
12. Explain why you can’t measure profit with cash and why you need to use accrual accounting (double-entry accounting), not cash accounting
13. Illustrate how accrual accounting can both record cash and profits using a spreadsheet
14. Explain the basis for bookkeeping and basic accounting without learning bookkeeping
15. Explain what each line item of the balance sheet means and distinguish between current and noncurrent assets, liabilities, and shareholders’ equity
16. Explain what each line item of the income statement means, including revenues, expenses, and earnings per share
17. Explain each important line item for the three sections of the statement of cash flows: operating activities, investing activities, and financing activities 
18. Explain how the format of the operating activities section differs from the other two activities (investing and financing)
19. Test your knowledge by completing 28 multiple-choice questions about the 2013 Facebook annual report
20. Explain four areas that can go wrong in a business (sales pricing, expense control, asset management, and asset financing)
21. Explain how four ratios (return on equity, profit margin, asset turnover, and financial leverage) can detect problems within the four potential problem areas
22. Compute return on equity, profit margin, asset turnover, and financial leverage ratios from real company’s financial statements
23. For the return on equity ratio, drill down into its three component ratios (profit margin, asset turnover, and financial leverage) to pinpoint problem areas
24. Start with the profit margin ratio and drill down to compute the gross profit percentage and expense percentage from a real company’s financial statements 
25. Locate management’s explanation for year-to-year changes in ratios from the company’s annual report
26. Summarize the key reasons for return on equity variations for a real company from year-to-year
27. Explain how four industries (distribution, manufacturing, service, and financial services differ in the way they make money
28. Explain how the profit margin, asset turnover, and financial leverage ratios can reveal the key differences in the way that four industries make money

No prior financial or accounting knowledge required.