Many investors don't care about reading financial statements.
Every investor is different, but some investors treat it more as a business than others.
The real question is; What makes you different from the average investor?
How can you be grounded in your investment decisions?
Investors always need to be informed on economic and macroeconomic information. Is this company the leading in its sector? Is it consistently profitable? Is it paying off debt and buying back shares? These are questions every investor needs to answer before they place their money into a stock or particular security. But no worries, more websites provide quick information that makes your analysis a little easier.
You can read a company’s financial statement on several websites; MSN-Money.com, Morningstar.com, Stocktwits.com, Yahoo!Finance.com, or the best source, The Security Exchange Commission (SEC).com. Some websites’ information may not always be accurate. The SEC requires businesses to submit their 10Q and 10K information- the 10Qs are quarterly statements, and the 10Ks are annual statements.
There are three important parts to the financial statement: the Income Statment, Balance Sheet, and Cash Flow Statement. Here you can find operating expenses, total revenue, company budgets, gross profit, and more. Many investors use a formula to find specific calculations that may contribute to whether they want to make the initial investment or not. There are hundreds of procedures to use, but one of the most commonly used formulas is the Profit-Gross Margin formula (Gross Profit ÷ Revenue= % Gross Profit Margin).
Business moguls, such as Warren Buffett, understand the importance of reading financial statements. Money management can make or break any billion-dollar corporation, and if you’re investing in a company and you don’t know what kind of revenue they are bringing home, stop what your doing now and read it! If you read the company’s shareholder reports (on their website), they are usually dressed up and sometimes have useless information. Find a website that has simple tips you can read from to get what you need!
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Closing Disclaimer: I am not a certified professional, nor responsible for any of your gains or losses. I’m simply a passionate stock investor who loves to share my experience and ideas with other women/men who want to learn general information about the market. I encourage you to study and evaluate before you make any purchase or sale in the stock market. We are a participant in the Amazon Affiliate Services LLC program, an affiliate advertising program designed to provide means for us to earn fees by linking to Amazon.com and affiliated sites.