Fundamental Analysis in Financial statement:
There are three very important sections
1. Balance sheet in a financial report tells the financial portfolio of a company. Three components can be found in balance sheet, that are, total assets, total liabilities and total equity. Therefore, from the balance sheet, value investors can figure out whether this company is using lots of debt to expand their business and boost their income or has ability to improve their financial condition
2. Next, from the income statement, the profit margin of a company can be calculated.
3. Last but not least, cash flow statement can be used to reveal how a company used their money and whether a company has ability to convert their product or investment into money. As a rule of thumb, if a cash flow statement is not comprehensive, please find another company which is more willing to reveal to their shareholders how the company used their money
Next post I am going to introduce how a balance sheet work. Feel free to give me a comment about this topic. It will be a great support to Xaivier Blog.
Written by: Xaivier Chia
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