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Showing posts from November, 2013

Analyzing Financial Statements

Whether you are a simple investor, or a decision maker in a company, the ability to understand the performance of a company by analysing the financial data is a mighty useful skill to have. A Financial statement is a summary of the financial performance of a company. The three main reports in a financial statement are the Balance Sheet, Income Statement and the Cash Flows statement.   By knowing  how  to  examine  a  financial  report,   you  will  gain  good understanding  of   the  general  trends  and  performance  of   a  business. One excellent way of analysing a financial statement is through financial ratios .   A ratio is quite simply,   dividing an item with another. For example, gross profit margin is calculated by dividing gross profit by net sales .   There are different types of   ratios that help one measure the profitability,   liquidity,   debt,   operating performance,   cash flow performance and investment valuation of   a company.   There are