stmt-read

# Stmt Read

Cheap or expensive comes last. First ask: is the profit real, is the balance solvent-ish, and does cash agree. Three statements, one quality check.

Inspired by kusandriadi/finance reading-financials.md (MIT). Original Grok remake. Complements invest-map (allocation after quality), cash-plan (household budget), nest-math (retirement nest), debt-order (consumer debt). Education only. Not a trade ticket.

Read `references/rails.md` before you write numbers. Fill the three templates under `templates/`.

## When to use

- How to read an income statement, balance sheet, or cash-flow statement
- Earnings quality, cash vs profit, is this company healthy
- Walk three linked filings as a worksheet before looking at multiples
- Compare a company to its own history and same-sector peers (generic, not a named exchange)

## When NOT to use

- Asset allocation, DCA, first portfolio → use invest-map (after this quality check)
- Household budget / sinking funds → use cash-plan
- Retirement nest / 4% sketch → use nest-math
- Which consumer debt to pay first → use debt-order
- Ticker recommendations, buy/sell, target prices, guaranteed returns
- Brokerage, Plaid, Alpaca, or any account login
- Forex, options, or crypto trading recipes; pump groups
- Banks and insurers as if they were factories (different frame: say so, do not force COGS)

## Inputs

- Company they named, plus the period (year or trailing periods). Do not invent a ticker to chase.
- Income statement, balance sheet, and cash-flow figures they paste or summarize. Label guesses. Confirm with the actual filing.
- Same-sector peer names if they have them (optional)
- Country / currency context (keep products generic if unknown)
- Industry type: industrial / services default vs bank / insurer (switch the frame)

## Procedure

1. Read `references/rails.md`. Refuse buy/sell, target prices, brokerage APIs, account numbers, and insider data.
2. Confirm all three statements. Income is period performance. Balance sheet is a point in time. Cash flow is actual cash. If one is missing, say the quality check is incomplete.
3. Walk income in `templates/three-statements.md`: revenue → COGS → gross margin → opex → operating profit → interest / tax → net income / EPS. Read trends and margins, not one lucky quarter. Revenue up and margin down is growth that is getting less efficient.
4. Walk the balance sheet: Assets = Liabilities + Equity. Current vs non-current. Debt/equity sketch, current ratio (current assets / current liabilities; ~1+ as a rough healthy sketch, labeled a sketch), interest-bearing debt, retained-earnings trend.
5. Walk cash flow: operating cash vs net income (big profit + weak or negative operating cash is a quality red flag). Investing cash is often negative for growers (capex). Financing is debt, dividends, buybacks. Free cash flow sketch = operating cash minus capex.
6. Answer the four questions before any multiple: growing? efficient? solvent-ish? cash real?
7. Fill `templates/quality-check.md`. Compare to the company's own history and same-sector peers. Absolute numbers alone are meaningless.
8. Fill `templates/red-flags.md`. Typical flags: profit up / operating cash down; receivables or inventory growing much faster than sales; interest-bearing debt ballooning while profit stagnates; auditor issues or late filings (generic language, not a named local opinion code as a mandatory requirement); profit driven by one-off asset sales; dividends or buybacks funded by new debt, not free cash.
9. Banks / insurers: say the industrial template does not apply (no COGS; capital and asset-quality language). Do not force the factory walk.
10. Closing line every time: education worksheet; not personalized financial advice. Every ratio is a sketch. Confirm with the actual filing. Then, and only then, they may look at cheap vs expensive with invest-map. This skill does not pick a ticker.

## Output format

- Three-statement walk (income, balance sheet, cash flow, with the links named)
- Quality check (growing / efficient / solvent-ish / cash real, plus peer and history notes)
- Red-flag list (present / absent / unknown)
- One line: education worksheet; not a trade ticket

## Safety

- Follow `references/rails.md` with no exceptions.
- No ticker recommendations, no buy/sell, no guaranteed returns.
- No brokerage / Plaid / Alpaca. No account numbers. No insider data.
- Label every ratio a sketch. Confirm with the actual filing.
- Country-neutral: do not require Indonesia IDX / BPJS / WTP / RDPU (or any local product) as mandatory. Audited statements and sector peers are generic patterns.
- Crisis / self-harm about money: stop; in the US, 988.

## Stop conditions

- Three templates delivered, or refused because they asked for a trade ticket / brokerage API / buy-sell call, or a sibling (invest-map / cash-plan / nest-math / debt-order) owns the ask