Over the six years since the first edition was published, accounting standards have been continuously revised.
Major accounting standards, including revenue recognition, financial assets, and leases, have changed, and accounting standards for the insurance industry are also scheduled to be revised.
All of this is important to users of accounting information, including investors.
These reasons led me to consider a revised edition of this book.
When I first wrote the book, I did my best, of course, but as time went by, I began to feel regretful that I should have written it a little better.
Above all, I decided that further delaying the revision would be disrespectful to the readers who have cherished this book.
Many readers felt that by putting everything into this book, they would be able to repay their 'debt in their hearts'.
(And now that I've finished all the work on the revised edition, I honestly feel like I've paid off that debt.)
--- From the publication of the revised edition

Key features of this revised edition include:
First, I rewrote more than half of the text, excluding Chapter 1, ‘Learning Accounting Easily and Fun.’

Second, all important contents of the revised Korean International Financial Reporting Standards for users of accounting information are included.

Third, all cases introduced in the first edition were replaced with the latest cases.
First of all, the names of the accounting subjects have changed, and readers will be able to analyze financial statements more interestingly if they look at the latest cases that have become hot topics.
--- From the publication of the revised edition

I can confidently say that accounting is not difficult at all and is thoroughly common sense.
It is a practical discipline that anyone can enjoy and approach, and does not require complex mathematical formulas or memorization.
Let's take this opportunity to discover the unique charm of accounting.
It will be a good opportunity to break away from the stereotype that it is difficult.
--- From Chapter 1: Learning Accounting Easily and Fun

This much is enough to understand double-entry bookkeeping.
From the perspective of a user of accounting information, it is sufficient to understand the principles, and there is no need to go into the details of what is entered into the debit (left) and credit (right) accounts and how accounting is done.
Since the information provided to users of accounting information is financial statements that reflect all accounting processing, the key is understanding and interpreting each account item that makes up the financial statements.
--- From Chapter 1: Learning Accounting Easily and Fun

Let me emphasize again that comparing consolidated financial statements from 10 years ago is by no means a valid analytical method, as the scope of consolidation differs and accounting standards may have changed in the interim, leading to changes in accounting treatment for the same transactions or events.
Therefore, if you simply line up the past 10 years of financial statements and analyze them, the difference in monetary amounts will be so large that the possibility of comparison will inevitably be reduced.
Considering these environmental changes, when analyzing a company's financial statements, it is appropriate to only extract and analyze financial statements for the period prepared under the same accounting standards.
--- From Chapter 1: Learning Accounting Easily and Fun

Even so, if a company's financial statements record inventory, tangible assets, and intangible assets as assets without any impairment charges, can users of accounting information or investors truly accept these financial statements as sound? Users of accounting information should always be able to critically analyze a company's financial statements, questioning whether the assets are valuable and whether their value is declining.
--- From Chapter 2 Understanding a company's financial structure through the balance sheet

1.
If the balance of accounts receivable on the balance sheet is large compared to the annual sales on the income statement, it can be assumed that there will be difficulties in collecting the accounts receivable.
2.
If the allowance for bad debts is high compared to the accounts receivable in the notes to accounts receivable, it can be assumed that not only is trust in past sales figures low, but cash flow has also deteriorated.
3.
Estimate the time to cash by calculating the accounts receivable turnover ratio (= sales ÷ average accounts receivable) and the accounts receivable collection period (= 365 ÷ accounts receivable turnover ratio).
If the time and age for cashing out are longer than usual, and even longer than in similar industries, then the transparency of the transaction should be questioned.
There is a possibility that the company's financial situation will worsen.
--- From Chapter 2 Understanding a company's financial structure through the balance sheet

The most difficult and complex issue among intangible assets is whether assets such as development costs and goodwill actually have value as assets.
In particular, if you see 'development costs' in the intangible asset account of the financial statements, it is a very important account subject that you should be suspicious of and examine in detail.
--- From Chapter 2 Understanding a company's financial structure through the balance sheet

For purchase-related expenses, enter the purchase price of materials, outsourcing processing costs, etc. that are presumed to be related to purchase payables in the notes on ‘Classification by nature of expenses.’
In fact, to be more accurate, we need to obtain data from within the company, but cost accounting data is a confidential document of the company that is not disclosed to the outside world.
Therefore, if you are thinking of calculating the average accounts payable turnover period from the perspective of an accounting information user, the best way to do so is to estimate it in this way and calculate it logically.
[Figure 2---32] is an annotation regarding the classification of SK Hynix's costs by nature.
Since the cost of raw materials, storage, and consumables and the cost of outsourcing are usually costs corresponding to accounts payable, these two values ​​are substituted into the numerator.
--- From Chapter 2 Understanding a company's financial structure through the balance sheet

It is not advisable to calculate the PER by unconditionally dividing the stock price by earnings per share, as companies that generate significant other income due to temporary events tend to have excessively large net income compared to operating profit.
However, companies with high-performing affiliates may have higher net income than operating profit each year due to equity method gains (income from investments in affiliates), so net income or earnings per share should be given more importance.
--- From Chapter 3, A Glimpse into Business Performance Through the Income Statement

Ultimately, users of accounting information have no choice but to protect themselves.
You must constantly study and repeat by looking at corporate financial statements and related books.
For that reason, the author recommends investing in stocks.
When investing your hard-earned money, you'll inevitably be motivated to study various aspects of a company, including its financial statements.
We need to look at how much they have and how much they earn each year, and we will invest after looking into the basics such as which affiliates or subsidiaries they have and what their shareholder structure is.
--- From [Accountant Park's Thoughts]

So far, we have looked at the composition and interpretation of key financial ratio formulas.
In conclusion, financial ratios are only for reference and are difficult to use as an important basis for corporate analysis.
There may be hidden fraudulent accounting and it may not be a normal business situation, but you should not vaguely judge that a high ratio is okay and a low ratio is bad.
I urge you to continue to develop your ability to comprehensively analyze financial statements, related notes, and the "Business Description" section of business reports.
--- Chapter 7: Analysis of Financial Statements and Key Financial Ratios

If you are a beginner investor, you should read many books written by legendary investors to develop your investment philosophy and mindset.
Next, you must steadily build up your skills by studying various subjects such as understanding the company and industry, analyzing financial statements and corporate value, etc.
There is no such thing as an easy study, but financial statements can be particularly difficult for investors who are not good with numbers.
Accordingly, we will present a comprehensive guide to effectively viewing financial statements from an investor's perspective.

--- Summary of key points: How to read financial statements from an investor's perspective