All the information you need to know aboutenterprise, is only a few documents issued for public analysis (if it is an open joint-stock company) annually. Of course, you will not be able to learn about some important things, such as, for example, the progress made in research developments, since this is confidential information, but what is publicly available information should be enough to form a general idea of state of affairs of the company. The analysis of financial statements will help you determine what the company's profit for the reporting period was, compare it with past periods, analyze the financial stability of the enterprise, the structure of assets, etc.
Such an analysis can be done, as alreadyit was said, having studied 5-6 basic public documents, and in order to make the main analysis of financial statements, you will have enough and three. The three main public documents are the balance sheet, which focuses on the assets and liabilities of the enterprise; The profit and loss account, from which you can get information about how the company earned its profits; a cash flow statement that specializes in the circulation of cash.
Start analysis of financial statementsit is necessary from the balance sheet. The first thing that it should pay attention to is the structure of assets. Based on the state of the company's assets, we can draw a conclusion about the prospects for the development of the company. If the assets of the enterprise are predominantly non-current, it means that the company expects success in the long term, and short-term setbacks should not embarrass potential investors. On the other hand, this may indicate the inability of the enterprise to pay off its current obligations.
As for the structure of liabilities, herespecial attention, when performing an analysis of financial statements, it is necessary to give their correlation with current assets. If the company has too many debts, and there are no funds to repay them, this puts into question the possibility of issuing new loans to the company.
Having studied the balance, we turn to the analysis of the structurearrived. In addition to the final figure, we are also interested in how exactly the profit was earned. The most important is profit from the main type of activity, since it is not accidental, and based on it you can make long-term forecasts about the fate of the enterprise. In addition, it is necessary to analyze, due to which there have been changes in the dynamics of profit. This may be due to price changes, lower costs or other factors. It is important for the investor to determine whether profit growth is caused by a competent policy of the management company, or was the result of a successful combination of circumstances on the market.
We finalize the analysis of the financial statements with a report oncash flow. Cash can be directed to current needs and investments, while their source is the company's financial activities and sales revenues. The effectiveness of control over the receipt and expenditure of cash is an indicator of the work of the company's managers.
If you are interested in more in-depth information, thenyou can look at the report on the movement of capital, on the basis of which an analysis of the company's financial performance is conducted: as well as some other documents. Despite the fact that such an analysis, called rapid analysis, can not be called profound, its speed is the advantage. On the basis of the same result, in most cases it can be concluded whether it is worth investing in a particular company.