Investing Basics: Fundamental Analysis

New investors often ask, "How do I know which stocks to buy?" Don't just guess—learn how investors can use financial statements to help determine the best possible investments.

(1022-229A)

[janellequinn]

Please keep these AWESOME informational videos coming ❤

[ExploringLoveinlife]

Where can I get to see their balance sheet, cash flow statement and income statement

[ztijlkv]

A quick summary that I wrote down:

Fundamental analysis - process of analyzing a company's financial statements to help decide if you want to invest
-Balance sheets
-Income statements
-Cash flow statements
A balance sheet compares a company's assets to its liability's and the shareholders equity.
-assets = items a company owns
-Liabilities = debts or accounts that need to be payed (often have offsetting assets)
-shareholders equity = book value = amount of money left to shareholders if company shuts down.
- assets - liabilities = shareholders equity
A balance sheet can help you determine if a company is overextending and isn't a worthwhile investment.
Income statement = how a company earns money
Income statement shows revenues and expenses
Revenues - Expenses = Net Income
A company with a good cash position is better suited to endure economic ups and downs
A cash flow statement shows how a company uses its cash to operate its business, as well as showing a company's loans
P/E ratio = share price / earnings per share
P/E ratio allows you to look further then the value of the stock
the lower the P/E ratio, the better the value