Most of the people invest their money in the stock market by listening to the advise of their brokers, friends, relatives or Hot Tips. But this type of Information doesn’t give you the holistic broad picture of the Company.
It is said that, there are no Shortcuts to becoming a Successful Investor. The Ideal Investment is one in which the Investor has thoroughly analyzed the Financial Statement of the Company.
A Financial Statement is the Score Card of a Company which gives you the clear picture about what’s going on in the Business.
A Financial Statement has many parts such as Income Statement, Balance Sheet & Cashflow Statement. You should review all the parts of the Financial Statement in Company’s Annual Financial Statement report.
Unlike annual results, Quarterly results are not accompanied by Balance sheet numbers and Cashflow Statements. That’s why it becomes difficult to assess the strength of the Company by only looking at its quarterly result.
What to See -
- Corporate Governance: Find out if there is any significant churning at board level.
- Financial Statements: Review Consolidated P&L Account, analyze expense/gains.
- Shareholder Information: Scrutinize if there is higher free float. It contributes to greater trading liquidity and lower transaction costs.
Start from Cashflow statements of the Company. than go further…!!!!!
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