Making Sense of Financial Statements
Financial analysis doesn't have to feel like deciphering ancient hieroglyphics. Most people starting out in this field worry they'll never understand what all those numbers mean—but honestly, it's more about building the right habits than having some special talent.
We've worked with hundreds of learners across South Africa who came in thinking financial statements were impossibly complex. And sure, there's depth here—but the fundamentals? They're surprisingly approachable once you stop treating them like mysteries.
Start With What Actually Matters
Here's something nobody tells beginners: you don't need to memorize every accounting standard before you can analyze a balance sheet. What you need is context—understanding why companies report certain figures and what those figures reveal about operations.
When we redesigned our learning approach in early 2025, we stopped overwhelming students with theory first. Instead, we start with real company statements. Pick any JSE-listed business and look at their annual report. The patterns emerge faster when you're working with actual data rather than textbook examples.
Focus initially on three areas: liquidity (can they pay bills?), profitability (are they making money?), and debt levels (how much do they owe?). Everything else branches from these fundamental questions.
Six Things That Actually Help
Read Backwards
Start with the cash flow statement, not the income statement. Cash tells you what actually happened—profit can be more subjective. Once you see where cash came from and where it went, the rest makes more sense.
Compare Over Time
One year's numbers don't mean much in isolation. Pull three years of statements and watch trends develop. Is debt growing faster than revenue? Are margins improving? Patterns matter more than single figures.
Industry Context
A 5% profit margin might be excellent for retail but concerning for software. Don't judge numbers in a vacuum—understand what's normal for that specific sector before drawing conclusions.
Notes Are Gold
The footnotes contain details that change everything. A company might look profitable until you read Note 12 and discover they sold a building to boost income. Always read the notes—that's where reality lives.
Ratios Tell Stories
Calculate current ratio, debt-to-equity, return on assets, and profit margin. These aren't just academic exercises—each ratio answers specific questions about financial health and operational efficiency.
Question Everything
If something looks odd, it probably is. Sudden inventory spikes, revenue recognition changes, or unusual one-time items deserve investigation. Healthy skepticism is part of good analysis.
Henrik Vandenberg
Financial Analysis Instructor
Building Practical Skills
I've taught financial analysis for twelve years, and the students who progress fastest share one trait: they practice with real statements, not just practice problems. Theory matters—you need to understand accrual accounting and depreciation methods—but retention comes from application.
When someone asks me how long it takes to become competent at statement analysis, I usually say six months of regular practice. Not because the concepts take that long to learn, but because pattern recognition develops over time. You need to analyze dozens of companies before you start spotting red flags instinctively.
Here's what I recommend focusing on throughout your learning:
- Spend at least three hours weekly analyzing actual financial statements from different industries
- Build Excel models rather than just reading reports—constructing your own analysis forces deeper understanding
- Join study groups or discussion forums where you can debate interpretations with peers
- Read earnings call transcripts alongside statements to see how management explains their numbers
- Practice explaining findings to non-financial people—if you can't simplify it, you don't fully understand it
The market context matters too. South African companies operate under IFRS, but they face unique challenges—currency volatility, regulatory environments, market concentration. Understanding local business conditions helps you interpret statements more accurately.
Programs Starting September 2026
We're accepting applications for our comprehensive financial analysis program launching in September 2026. This isn't about memorizing formulas—it's about developing genuine analytical skills through intensive practice with real-world statements and case studies.
If you're ready to move beyond surface-level understanding and build capabilities that actually matter in financial roles, we'd like to hear from you.