I'm interested in learning the differences between profit and cash, but also about cash flows and financial statements.

What book do you recommend I read?

I want to read a practical book that details the "how", not the "what." I already have a basic knowledge of finance.

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    This question appears to be off-topic because it is about accounting and not directly related to personal finance. Consider following the proposal for an accounting site if this is an area you're interested in and would like to learn more about. Jul 21, 2013 at 19:00
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    @JohnBensin Whether this is off-topic depends on whether the interest here is merely in interpreting financial statements from an individual investor's perspective (on-topic), or else actually creating financial statements with accounting (off-topic). Jul 21, 2013 at 19:21
  • @Legato For what purpose would you like to learn about financial statements? Could you elaborate on what you mean by "the how"? Jul 21, 2013 at 19:22
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    I have read a book named "Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!" and he explained and displayed how to review and understand the financial statement and cash flow. The book is not an academic approach, it is a pragmatic book based on reality. I wanna learn how to do it, not knowing the concept from an academic view. I wanna learn because it is fun and you can use it in the future! Proactive planning. Jul 21, 2013 at 19:44
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    Any good financial accounting book should have chapters on what you are looking for. Ask any of your friends to lend you one. Or if somebody has done CFA, you know, ask for his(her) study material, it has quite in detail there.
    – DumbCoder
    Jul 22, 2013 at 8:55

2 Answers 2


I would recommend "How to Read a Financial Report : For Managers, Entrepreneurs, Lenders, Lawyers, and Investors" by John A. Tracy for the following reasons:

  1. Quality of the material - It teaches through examples of financial statements, and provides detailed analysis. It helps the brain develop those "What is really going on with this company" abilities.
  2. It's well regarded - I was recommended it by my accounting professor who recommended it to all of his students for its ease of use and not-too-dry tone, and it has good ratings on Amazon.
  3. It's a quick read (180 rather small pages).
  4. It's cheap to pick up and nowhere near the bulk of a textbook, meaning it can be brought with you as a reference.

I also think the book would bridge the gap nicely between a broad understanding of finance and a more serious technical know-how.


"Why Stocks go up and Down" by William H Pike is a great source if you are looking to interpret statements for stock analysis. This book really starts from the beginning and clearly explains with a running example of a fake company.

  • Mind putting in the author name too to make it more clearer.
    – DumbCoder
    Jul 23, 2013 at 14:06
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    I'd not heard of the book. Edited in a link to Amazon, and added author name. Jul 23, 2013 at 14:41
  • @MrCrister - I saw this through the 'review' page. Now that I'm on the question page, I see the deleted question. Ok with however you'd like to handle this. Jul 23, 2013 at 16:56
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    Sincerely speaking, are you the author of this book ? I haven't hear about this book or the author either.
    – DumbCoder
    Jul 23, 2013 at 16:58
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    Interesting. I read The Big Short, so was aware of Michael. And also knew the other 3 books. Jul 23, 2013 at 20:06

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