How to Invest in the Stock Market - Reading Financial Statements & Reports 11



00:03 01:47 Knowing how to work with the numbers in a company's financial statements is an essential skill for stock investors. The meaningful interpretation and analysis of balance sheets, income statements and cash flow statements to discern a company's investment qualities is the basis for smart investment choices. However, the diversity of financial reporting requires that we first become familiar with certain general financial statement characteristics before focusing on individual corporate financials. In this article, we'll show you what the financial statements have to offer and how to use them to your advantage. TUTORIAL: Advanced Financial Statement Analysis 1. Financial Statements Are Scorecards There are millions of individual investors worldwide, and while a large percentage of these investors have chosen mutual funds as the vehicle of choice for their investing activities, a very large percentage of individual investors are also investing directly in stocks. Prudent investing practices dictate that we seek out quality companies with strong balance sheets, solid earnings and positive cash flows. Whether you're a do-it-yourself or rely on guidance from an investment professional, learning certain fundamental financial statement analysis skills can be very useful - it's certainly not just for the experts. Over 30 years ago, businessman Robert Follet wrote a book entitled "How To Keep Score In Business" (1987). His principal point was that in business you keep score with dollars, and the scorecard is a financial statement. He recognized that "a lot of people don't understand keeping score in business. They get mixed up about profits, assets, cash flow and return on investment." Read more: 12 Things You Need To Know About Financial Statements | Investopedia For Finance, Investing, Stock Trading, Banking, Real Estate, Money, Options, Currency, Gold, Market "How to" Tutorials Go to - We have tons of investment, trading & personal finance videos, that are perfect for beginners & dummies. Learn the basics & grow your wealth!

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