Two weeks ago I wrote that voting shares was a great opportunity for shareholders to teach themselves a little about the companies whose stock they hold. One way to do this is to look through the proxy vote website to see what the company has to say about their preferred positions. Another way is to look through […]
Financial Statements and Ratios
If you want to know how well a company looks after the interests of its shareholders, you won’t find it just by looking at the balance sheet or income statement. Look at the Statement of Shareholder’s Equity. It combines information from the balance sheet, income statement, cash flows and notes to the financial statement to show you all of the equity changes in one place.
As part of our continuing series on Understanding Financial Statements and Ratios, we turn to the balance sheet to look at a company’s liquidity, or whether it has the resources to pay its bills. We’ll calculate Net Working Capital, the Current Ratio and the Quick Ratio to see how well the company can cover current obligations with current assets.
When assessing whether you would like to invest in a company’s stock, you can learn a lot about a company’s health and continuing viability by looking at operating cash flow and free cash flow. We’ll be diving in to the Statement of Cash Flows for Part 2 of our series on Understanding Financial Statements and Ratios.
In Part 1 of our series on Understanding Financial Statements and Ratios, we look at the income statement and the ratios that compare income to expenses: Gross Profit Margin, Profit Margin, and Operating Margin. We’ll use compare 2 titans within the same industry and look at how they compare over time.