How to Analyze the Balance Sheet to Pick Stocks

The balance sheet is the most underrated of the three financial statements and YOUR opportunity for finding the best stocks and avoiding the worst traps with some simple balance sheet analysis.

Of the three financial statements, investors spend the least amount of time with balance sheet analysis. No idea why! The balance sheet shows you what you actually own in a company, the actual investor assets. Wouldn’t you want to know what’s in it?

In this video, I’ll explain the balance sheet and give you a complete tutorial. We’ll start with the balance sheet basics and what it shows. I’ll be using the Apple balance sheet for examples and go through each section; assets, liabilities and stockholders’ equity. I’ll show you how to analyze the balance sheet and then reveal the balance sheet ratios you need to know.

Unlike the other financial statements, the balance sheet is a snapshot in time. It shows everything the company owns (assets), everything it owes (liabilities) and everything left over for investors. This is obviously important because it gives you a clear idea of what you’re buying when you invest.

Not only can balance sheet analysis help you find the best stocks to buy but it can also help you avoid the worst investing traps. You can avoid companies that book a lot of intangible assets, those depending on an arbitrary valuation to boost their book value. You can avoid companies getting in trouble with debt that could be heading for bankruptcy.

Don’t avoid the balance sheet like so many investors. It’s not as popular as the income statement or cash flows but is just as important.

Check out the other two videos in our financial statement analysis tutorials:

0:00 Balance Sheet Analysis for Stocks
2:08 What is the Balance Sheet?
2:28 What does the Balance Sheet Show Investors?
3:27 Apple Balance Sheet Analysis Example
3:38 What are Assets on the Balance Sheet?
8:04 What are Balance Sheet Liabilities?
9:03 What is Stockholders' Equity?
9:16 How to Use the Balance Sheet to Analyze Stocks
12:14 5 Must Know Balance Sheet Ratios

My Investing Recommendations 📈

Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
#investing #stockmarket #stocks

[iacacch]

first time in my life I did not have to speed up a youtube video. Great pace, great information.

[mgg]

Thanks for this series. For all the "hot stock pick" channels out there, most are a great way to lose money AND pay more in taxes. Fundamental analysis is a must. Thanks again!

[dbtrek]

Love the amount of knowledge you share, thanks!

[RobCLynch]

Thanks Joe. That was very useful. It's good to have a little refresher because I used to use a similar approach ten years ago and it's very easy to get lazy and star skipping steps.

[poke-trainermatt]

Love this videos on how to analyze, look at facts, and statistics. Keep them coming!

[lifewithyo]

This is fundamental video that everyone should know when analyzing a company's financial performance. Thanks Joe

[absw]

Before I found this channel, I thought investing in stocks was complicated. Now I see that it's a pretty simple process, that just takes a ton of time.

[quentindunigan]

Your intro was dope. You should bring it back, it reminds me of the wave race 64 intro.

[avalon]

I wanna specialize in real estate analysis so could you include some education on how you go about analyzing real estate both physical and reits?

[anthonyvence]

I just subscribed recently. Great videos! Can you please give your sentiment on NVCR?

[carlaknowles]

Hi there, new subscriber here. Just getting started with investing and I'm already 50. If you haven't already, can you please do a video on things we older investors can do to help build our portfolios a bit quicker? If you've already posted a video on this can you please direct me to it? I've looked through your videos and I don't see one... thanks

[josefjosef]

Do you know a website where I can download these excel sheets in all the same form?

[victorguzman]

What do you guys think of sundial growers?

[sailorbobbyhill]

Take a shot every time he says "nation."

[ambroseg.asante]

OMG! Thank you for taking me back to school Joe😀 much appreciated🙏👍

[jimmysnow]

People will be kicking themselves in few weeks if they miss the opportunity to buy and invest in bitcoin

[rd]

If you don't read the balance sheet, you are just gambling. Plain and Simple.