All the information you need to know about the company, is just a few documents produced for public analysis (if it is an open joint stock company) annually.Of course, you will not be able to learn about some important things, such as, for example, progress in research development, as this is confidential information, however, and that is information which is in the public domain, should be enough to build a common understanding of thethe state of affairs of the company.Analysis of the financial statements will help you determine what was the company's profit for the period to compare it with previous periods, to analyze the financial stability of the company, the structure of assets, etc.
A similar analysis can be made, as already mentioned, having studied the 5-6 key public documents, and to make a basic analysis of financial statements, and three will be enough.The three main public document - a balance sheet, focus on the assets and liabilities of the enterprise;the profit and loss account, from which you can get information about how the company earned a profit;Report of Cash Flows, specializing in turnover of cash.
begin analysis of financial statements with the balance sheet is necessary.The first thing that it should pay attention - this is the structure of assets.Based on the condition of the assets of the company, we can conclude about the prospects of the company.If predominantly non-current assets of the company, it means that the company expects to succeed in the long term, and short-term setbacks should not be confused potential investors.On the other hand, it may indicate failure of the company to pay its current liabilities.
Regarding the structure of liabilities, there is special attention, performing the analysis of financial statements, should be given their relation with current assets.If the company has too much debt, and funds for their redemption is not available, then it casts doubt on the possibility of issuing new loans.
examining the balance, proceed to the analysis of the structure of earnings.In addition to the final figures we are also interested in exactly how the income was earned.The greatest importance is the profit from the main activity, as it is not random, and based on it, you can make long-term predictions about the fate of the enterprise.In addition, it is necessary to analyze, due to what has been a change in the dynamics of profit.This may be due to changes in prices, cost reduction or other factors.For the investor it is important to determine whether the increase in profits competent policy governing the company, or was the result of a successful combination of circumstances in the market.
completes the analysis of the report on the financial statements of cash flows.Money can be sent to the current needs and investments, while their source is the financial activities of the company and sales revenue.The effectiveness of the control of receipts and disbursements of cash is a measure of the work management company.
If you are interested in more in-depth information, you can look into the report on the movement of capital, on the basis of which the analysis of financial activity of the company: as well as some other documents.Despite the fact that such an analysis called express analysis can not be called a deep, its advantage is the speed of implementation.On the basis of the result obtained in most cases it can be concluded whether or not to invest in a particular company.
