Do you know how to read financial statements but still find it difficult to determine which companies are good? It is difficult to truly understand a company simply by calculating figures such as PER, PBR, debt-to-equity ratio, and operating profit margin. What matters is not just how large or small the numbers are, but understanding why they turned out that way. For many years, I analyzed and evaluated companies at financial institutions, reviewing countless financial statements. Through that experience, I came to realize that the key to corporate analysis is not memorizing numerous financial ratios, but understanding the characteristics of the industry and business and identifying a company’s profit structure and risks from changes in the figures in its financial statements. The current lecture materials are also structured around the perspective that a company’s environment and management decisions are reflected in its financial statement figures through its asset structure, capital structure, and cost structure. In this lecture, we will not study financial statements by memorizing them from beginning to end. Instead, from the perspective of actual corporate analysis, I will explain how to distinguish business risk from financial risk, why the figures you need to examine differ depending on the industry, and how a company’s cost structure and leverage change its profits and risks.