March 13, 2014

Learn a Thing or Two about Financial Statements

“I am a people person; therefore I am not a numbers person.” We hear this all the time in the Human Resources (HR) world and encourage overcoming the “fear” of numbers to achieve career growth. The United States Securities and Exchange Commission (SEC) says it the best, “If you can read a nutrition label or a baseball box score, you can learn to read basic financial statements. If you can follow a recipe or apply for a loan, you can learn basic accounting. The basics aren’t difficult and they aren’t rocket science” (basic addition, subtraction, multiplication and division). Here are some hints at gaining financial insight to help you become an “asset” to any company (pun intended):

Job Seekers 

Look for financial information prior to accepting an interview. For public companies, review financials posted on or Edgar, which include quarterly and annual filings and the variances. Not-for-profit organizations are required to file 990s with similar information. For private companies, look on About, press or news sections of their websites and social media. Use the information to develop interview questions: Have you maintained your workforce? Do you foresee layoffs? Do you have appropriate cash flow? Are you forecasting growth?


If you are subject to a bonus, and you have made plans for that money, it would be prudent to review your company’s financials to see if they are on track profitability-wise. Ask questions. Think beyond the job in front of you.


Schedule time with the in-house accountant to explain your department’s status individually and in relationship to the company as a whole including; annual expenses, industry benchmarks; budget forecasts (is it realistic and do you have control?); budget and cost assumptions; variances and fluxes; period to period reporting; current internal controls; and how goals are set. Keep your financial partners accountable and ask questions until you feel comfortable. Ask what you can do to make accounting’s job easier, it’s a great way to build a partnership.

Business Owners Keep Your Eyes Open

Can you determine what is reasonable and explainable? Understanding the relationship between profit and loss statement, cash flow and the balance sheet is key. If items are not moving on and off the balance sheet, that’s a red flag. Hire an independent (not related to anyone at the company) CPA firm do an independent review to keep everyone honest. If you suspect criminal activity, engaging a forensic accountant is an option.

Why should you care?

Financial knowledge is power that can help you be more marketable, valuable, and integral. For the SEC’s basic brochure on how to read financial statements, go to “The Beginner’s Guide to Reading Financial Statements” at .

Written by Jim Annis President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

© 2022 The Applied Companies       ALL RIGHTS RESERVED       PRIVACY POLICY
chevron-right linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram