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So you want to invest like a PRO?
You may want to learn how to read financial statements.
But how to tell them apart?
What do they tell you?
Let's have a discussion.
"Financial Statements"
A Thread
You may want to learn how to read financial statements.
But how to tell them apart?
What do they tell you?
Let's have a discussion.
"Financial Statements"
A Thread
1.
Publicly traded companies are required to publish a variety of financial documents to give investors insights into the business and how it operates.
There are three primary financial statements to look for:
-Balance Sheet
-Income Statement
-Cash Flow Statement
Publicly traded companies are required to publish a variety of financial documents to give investors insights into the business and how it operates.
There are three primary financial statements to look for:
-Balance Sheet
-Income Statement
-Cash Flow Statement
2.
The Balance Sheet:
Is sort of "summary" of a company's financial position.
It groups a company's financials into three main groups:
-Assets (what a company possesses)
-Liabilities (what a company owes)
-Equity (the value left over for shareholders after liabilities)
The Balance Sheet:
Is sort of "summary" of a company's financial position.
It groups a company's financials into three main groups:
-Assets (what a company possesses)
-Liabilities (what a company owes)
-Equity (the value left over for shareholders after liabilities)
4.
The Income Statement:
Will break down the details surrounding the profits that the business is making.
It show you profits in various forms with different variables subtracted out.
This includes:
-Gross Income
-Operating Income
-Pre-Tax Income
-Net Income
The Income Statement:
Will break down the details surrounding the profits that the business is making.
It show you profits in various forms with different variables subtracted out.
This includes:
-Gross Income
-Operating Income
-Pre-Tax Income
-Net Income
5.
The income statement will reveal the details behind why a company is making/losing money.
You can use this information to judge the business and its performance!
Sometimes a bad headline number can be explained by diving deeper into the details.
The income statement will reveal the details behind why a company is making/losing money.
You can use this information to judge the business and its performance!
Sometimes a bad headline number can be explained by diving deeper into the details.
6.
The Cash Flow Statement
Tells you how cash is flowing into, and out of the business.
Cash flows in three primary categories:
-Operations (day to day activities)
-Investing (equipment, or other investments)
-Financing (debt, dividends, buybacks)
The Cash Flow Statement
Tells you how cash is flowing into, and out of the business.
Cash flows in three primary categories:
-Operations (day to day activities)
-Investing (equipment, or other investments)
-Financing (debt, dividends, buybacks)
7.
Tracking a company's cash flow, you learn a TON about what a company is thinking.
You might learn about how they are expanding, or how much money they are returning to shareholders.
Cash is like "blood" flowing through the body. Tracking it is like a pulse.
Tracking a company's cash flow, you learn a TON about what a company is thinking.
You might learn about how they are expanding, or how much money they are returning to shareholders.
Cash is like "blood" flowing through the body. Tracking it is like a pulse.
8.
Learning to read these financial statements, and being able to APPLY what you observe from them - is an incredibly useful tool for any investor.
It's well worth the time and effort to learn and to practice!
Learning to read these financial statements, and being able to APPLY what you observe from them - is an incredibly useful tool for any investor.
It's well worth the time and effort to learn and to practice!
10.
That wraps up this thread!
If you enjoyed, please follow along @theefinanceguy
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That wraps up this thread!
If you enjoyed, please follow along @theefinanceguy
Feel free to Retweet this to spread information to a friend
