Reading and interpreting corporate financial statements for non-financial managers
30 May 2025In an increasingly competitive and complex business environment, understanding corporate financial statements is no longer a skill reserved only for business and finance experts. Operational, production, marketing, and HR managers must also be able to read and interpret key financial documents, understand the components of the balance sheet and income statement, and make informed decisions that contribute to overall business performance.
Reading a financial statement means decoding the company’s economic and financial “snapshot,” identifying strengths, weaknesses, and opportunities for improvement.
The core documents of financial statements
The annual financial statement consists of three main documents:
- The balance sheet, divided into assets and liabilities, which represents the company’s financial position at a given point in time.
- The income statement, showing the company’s performance over a specific period, including revenues, costs, and operating profit – sales, cost of goods sold, operating expenses, depreciation, and interest.
- The cash flow statement, which illustrates how financial resources were generated and used.
These three documents are interconnected: the result of the income statement (profit or loss) affects the equity section of the balance sheet and is reflected in the cash flow statement.
Reading and interpretation techniques
So, how does one read a financial statement? For a professional without a finance background, it might initially seem daunting. However, practical techniques exist that allow for quick familiarity with financial data.
Examples include:
- Ratio analysis involves calculating key performance indicators (KPIs) to assess a company’s financial health, profitability, and liquidity. Key metrics include:
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which measures the company’s operating profit, is useful for evaluating core profitability.
- ROE (Return on Equity), used to assess the return on shareholders’
- Current ratio and quick ratio, which evaluate a company’s ability to meet short-term obligations.
- Vertical analysis compares each line item of the financial statements to a base amount, such as costs as a percentage of revenues.
- Qualitative analysis looks at explanatory notes and management reports to understand strategic choices and assess future risks.
To give a simple, practical example, if the EBITDA ratio in a company’s financial statements decreases from the previous year, one can sense a deterioration in operations: if debts are growing relative to revenues, there may be a financial sustainability problem.
The impact of understanding financial statements on managerial decisions
Every managerial decision has financial implications, this is why decision-makers must understand financial statements.
Only then can managers evaluate the true profitability of a project or product, assess the financial requirements of a new initiative, communicate effectively with CFOs, and monitor business performance using KPIs.
In this way, it becomes possible to make consistently informed choices and set goals consistent with the company’s economic sustainability.
A marketing manager who can read the company’s balance sheet, for example, will also be able to assess the effectiveness of a campaign in terms of the impact of costs on the operating margin. An HR manager will be able to consider the economic effects of a welfare or hiring plan.
Today, finance for non-financial managers is a key competency in managerial training programs, as it enhances strategic awareness and value creation.
Bologna Business School is able to offer several high-level training paths to accompany students and professionals in understanding corporate financial statements and realizing how necessary these skills are for the company.
Open Program: Finance for Non-Finance Managers 1 – Understanding Financial Statements
A part-time, vertical course taught in Italian, consisting of eight sessions over five days. It’s designed for those looking to master accounting language.
Understanding and interpreting financial reports and being able to communicate effectively at all levels helps create value and advance one’s career.
This 39-hour blended course (with both online-only and hybrid sessions) provides foundational financial and accounting terminology and the skills needed to analyze and interpret financial statements, essential for succeeding in the business world.
Professional Master in Entrepreneurial Finance
A full-time, 12-month English-language program aimed at recent graduates in economics, engineering, finance, or management with good English proficiency.
Designed to develop future leaders in financial innovation and startups, this program offers strategic and practical skills to support business growth and financial innovation in dynamic, high-volatility environments.
With a placement rate of over 90% within six months and a 500-hour internship, it’s a prime gateway to a career in finance.
Professional Master in Finance and Artificial Intelligence
The full-time, 12-month English-language Professional Master in Finance and Artificial Intelligence is a program designed to match financial applications with the most innovative technological advances. AI, big data, and blockchain, alongside traditional finance skills, create a program, with Deloitte, Nexi, and other global leaders on the Program Advisory Committee, designed to give direct access to the business world. Thanks to the BBS global network and six-month internships, this cutting-edge course is guaranteed to provide pragmatic training that keeps pace with market demands.
Open Program: Administration, Finance and Control
A part-time, blended course in Italian, designed to keep professionals updated on managerial tools and approaches in finance and administration.
With 11 evening sessions across eight days, this highly practical program tackles strategic challenges and cross-functional knowledge critical to this business area.
Open Program: Finance for Non-Finance Manager 2 – Management Control and Cost Analysis
A part-time, blended course in Italian, designed for managers and entrepreneurs who want to enhance their activities through management accounting.
Management control should provide managers with focused financial data to support strategic decision-making and performance monitoring.
This course enables non-financial professionals to understand financial analysis models and make consistently informed and strategic business decisions.
