3Module 3

How to Read Financial Statements

This module covers what a P/E ratio, a dividend, a stock split, and a bankruptcy actually mean for an investor — the market logic, not the accounting mechanics. For the line-by-line mechanics of reading a real balance sheet or income statement, see Understanding Indian Companies, the other course on /learn.

5 chapters · about 23 minutes

  1. 3.1What Do Financial Statements Actually Tell You?5 min

    Riya had owned a piece of this business for four years and had never read a page of its accounts. What was she missing?

  2. 3.2What Is the P/E Ratio? Is Aman's Bakery Too Expensive?5 min

    The accounts proved it was a good business. They said nothing about whether the price was sensible. How do you tell?

  3. 3.3What Are Dividends and Stock Buybacks? Sharing the Extra Cash4 min

    The bakery has ₹2 crore it doesn't need. There are two ways to give it back, and they feel nothing alike.

  4. 3.4What Is a Stock Split? Cutting a ₹5,000 Share Into Ten4 min

    Riya went to bed owning 50 shares and woke up owning 500. Had something happened while she slept?

  5. 3.5What Happens When a Company Goes Bankrupt?5 min

    City Bakehouse opened twenty branches in two years. Then it opened none, ever again. Who got paid, and in what order?