It would be difficult to go into the many aspects of reading and understanding financial statements within the scope of this forum, but I can give you the big picture. The balance sheet represents the financial position of the company as of the balance sheet date.  you would first look at the stockholder's equity section to see if the company has positive retained earnings. If so, this is an indicator that the company is healthy and has been earning profits that are retained in the business.  There are many analytics to review the balance sheet, examples of which are working capital, debt to equity ratio, return on total assets, etc.  The income statement is simply a calculation of the company's income and expenses for the period of time or date range specified.  Clearly, you want the "bottom line" to be a positive amount, indicating that a profit, and not a loss, has been earned. You should look at the income statement trend for five years to see how the company has been performing, what direction it is heading, etc.  The third primary financial statement is the statement of cash flows. This will tell you if the company is generating cash from operations, from financing activities (e.g. loans and debt service payments), and from investment activities (e.g. purchases and sales of property and equipment).