Many ordinary people have a headache when they read stock financial reports, but in fact, when we break down the three tables, we can understand them in plain language. The first balance sheet is the entire current assets of the enterprise. The formula is simple: all assets in hand are equal to the debt owed by the outside world plus the money truly left by the boss. Don't rely on numbers when looking at this table, focus on accounts receivable and inventory, as these two items are the easiest to hide tricks. The second profit and loss statement directly looks at whether the enterprise is making money or not. Like a funnel, first calculate the total annual sales, deduct various expenses such as procurement and operation, then deduct taxes, and finally the remaining is the actual net profit. Judging whether a product is good or bad only depends on two numbers: gross profit margin and net profit margin. The higher the value, the more profitable the product is and the stronger its competitiveness. The third cash flow statement is the lifeline of a company, only accounting for the inflow and outflow of real money and silver. Divided into three parts: The main business operation receipts are for generating revenue, and it is best to always be positive. The investment money for building factories and buying equipment is mostly negative, which belongs to long-term layout. Borrowing money and shareholder investment belong to fundraising, and both positive and negative are normal. Even if the book profit looks good, if there is no cash in hand, the enterprise is still prone to problems. Usually, quickly screen enterprises and focus on three core data types: profit based on gross profit and net profit, short-term debt based on a current ratio greater than 1, and debt risk control within 70% for greater stability. Finally, let me give you two key points for lightning protection: firstly, the annual profit on the books, but the main business cash flow is not profitable for a long time, which is likely due to inflated profits on the books. The second issue is that inventory and customer debts have risen much faster than revenue, which means that the goods cannot be sold and the money cannot be recovered, leading to explosive consequences in the later stage. Remember, don't just look at one report. Analyzing three reports together can avoid most financial traps