What Should I Look for in Financial Statements?
The few things to look for so financial statements stop feeling like a wall of numbers.
The answer in plain English
Look for four things: Is the company selling more? Is it making money? Does it have enough cash to pay what it owes? Is the business actually producing cash after its spending?
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Published September 12, 2026 · Updated October 11, 2026
Simple answer
There are three main statements. The income statement shows sales and profit. The balance sheet shows cash, debt, assets and what the company owes. The cash flow statement shows where real cash came from and where it went.
Why this matters
One statement can look good while another shows a problem. A company can report profit but still run out of cash. That is why you look at all three together.
Good signs
Revenue is growing, profit is positive, cash is healthy, debt is under control, and free cash flow is positive or improving.
Warning signs
Revenue is falling, profit is shrinking, cash is disappearing, debt is rising quickly, or the company keeps spending more cash than it brings in.
Easy mistake to make
Start with the main statements, then read the accounting policies and relevant notes even when the headline ratios look normal.
How Wall Street Score helps
Wall Street Score places those important numbers beside the score so you can quickly see what looks strong and what needs more research.
Read the income statement on a consistent basis
Revenue, operating profit and net income answer different questions. Compare the same reporting periods and distinguish reported amounts from adjusted figures. Check whether growth came from the existing business, an acquisition or currency translation.
EPS also depends on weighted-average shares. A higher EPS figure can reflect fewer shares even when total net income is flat.
Check which assets can meet which obligations
A balance sheet is a snapshot at a date. Review cash restrictions, receivable collectability, inventory quality and debt maturities. Total assets are not the same as cash available to pay bills.
Compare the statement with the debt and commitments notes. A company with long-dated debt faces a different timing problem from one with a similar balance due next month.
Reconcile profit with operating cash flow
Operating cash flow adjusts net income for noncash items and changes in operating working capital. Receivables, inventory and supplier payments can create large differences. A temporary delay in paying suppliers can improve cash flow without improving the business.
Capital expenditure generally appears in investing cash flow, not as a deduction within operating cash flow. A common free-cash-flow measure subtracts capital expenditure from operating cash flow. It is not necessarily the cash left after debt repayments, acquisitions and distributions.
Use the notes to test the headline figures
Follow a material change from the statement into its supporting note. For example, if revenue rises but customer cash collections lag, review receivables, payment terms and revenue recognition before concluding that growth is healthy.
Check reporting currency, fiscal year, accounting changes and restatements. Missing figures should remain unavailable, not be interpreted as zero. Comparing several periods is useful only when their definitions are consistent.
Apply this to a real company
Search a stock and see the numbers in context.
Use the stock page to compare the Wall Street Score with revenue, EPS, cash, debt, valuation, risks and the company explanation.
Further reading and verification
External references explain the underlying concepts and disclosures. Wall Street Score's examples and model interpretation are our own; these organizations do not endorse our scores.