Financial Statement Analysis
Succesful companies show growing sales, a healthy net margin, and a good return on invested capital. Financial statment analysis is the study of reported earnings and balance sheet, with the intent to better understand the fundamental value of the company.
The following resources propose tools to help with financial statement analysis
- Graham's Intelligent Investor book (Not only financial statements, but understanding investment)
- SEC's Beginner guide to financial statements (A good place to start)
- Old School Value (A tool to view and analyse financial statements more efficiently)
- Advfn (A web resource with annual financial statements on most quoted companies)
In the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine. as advocated by Benjamin Graham, and more famously put in practice by Warren Buffet, sets out some clear criteria for investment. Coupling these criteria with others about free cashflow, debt, shareholder dilution and analyst opinion, one can come up within minutes with a list of the best companies