Working capital is not a term with which many investors are familiar. Yet it remains one of the quickest and best ways to measure a company's financial health. This is what you need to know.

To be a good investor, you need to understand the basics of accounting. Here is your crash course to learn the most essential accounting principles.

How the income statement, balance sheet, and cash flow statement are connected and impact each other.

The P&L statement, which stands for profit and loss, is synonymous with a company’s income statement, and the two terms are often used interchangeably. This is one of three crucial financial statements that investors must understand.

How much of a business’s profit is each stock entitled to? This is a crucial question for investors and depends on how many shares the company has issued.

A comprehensive look at one of the most intimidating financial statements - the balance sheet. We go through the balance sheet line by line, explaining each term and line item.

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation & Amortization. It is a rough guide to show how much cash a business generates, but it doesn't always accurately reflect a company's true earnings.

The cash flow statement is the third of the three essential financial statements investors must understand to analyze businesses. Its purpose is to track cash movement over a period of time.

Just as you might determine your personal net worth by subtracting your liabilities from your assets, the balance sheet follows a similar formula to establish shareholders’ equity.

The purpose of the income statement is to show whether a company is profitable. It shows a company's operating results over a period of time. A helpful mental hack is to think of the income statement as your household budget.

Every investor needs to be able to read and analyze the income statement, balance sheet, and cash flow statement.

GAAP accounting is a commonly accepted set of rules and procedures designed to govern corporate accounting and financial reporting within the United States. Most companies report non-GAAP results to shareholders (in addition to their GAAP results) to add important color and nuance to their numbers that the GAAP standard misses.

Accrual accounting is used in the income statement and balance sheet. Cash accounting is used to create the cash flow statement. Both methods are practical in their own ways.

The balance sheet is important because it tells investors how much the company has in assets (e.g., cash and property) and liabilities (e.g., how much money it owes to vendors, banks, and bondholders). When reviewing a company's balance sheet, look for these yellow flags. When a yellow flag is identified, investors need to dig deeper.

The income statement shows investors whether a company is profitable. Here are the top five yellow flags that can show up on an income statement indicating that something needs to be checked under the hood.

The Cash Flow Statement tracks cash movement through the business. When analyzing a cash flow statement, look for 8 yellow flags. When a yellow flag is found, more research is needed.