by Analysing financial statements is an important part of the investment decision-making process. Understanding key indicators and interpreting them helps investors to assess the financial condition of a company and its prospects in the market.
Key financial statements
1. balance sheet: Reflects the financial condition of a company as of a certain date, including its assets, liabilities, and shareholders’ equity.
2. income statement (profit and loss): Shows a company’s revenues, expenses, and profit (or loss) for a specific period of time.
3. cash flow statement: Provides information about cash flow within the company for a specific period.
Key Indicators
1. Net Income: The company’s income minus all expenses and taxes.
2. Asset Turnover: Shows how efficiently a company uses its assets to generate income.
3. Debt Ratio: The ratio of a company’s liabilities to its equity, which indicates the degree of financial risk.
Data Interpretation
1. Comparison with previous periods: Analysing changes in financial indicators compared to previous reporting periods helps to identify trends and dynamics of the company’s development.
2. Comparison with industry standards: Comparing financial performance with similar companies in the industry helps to assess the competitiveness and efficiency of the business.
3. analysing the relationships between indicators: Understanding the relationships between various financial indicators helps to assess the financial stability and profitability of the company.
Conclusion
Analysing financial statements is an important tool for making informed investment decisions. Understanding the key indicators and interpreting them helps investors to assess the financial health and market prospects of the company.
Based on the analysis, investors can make informed decisions about their investments based on the company’s fundamentals and financial performance.
