HOW TO READ FINANCIAL STATEMENTS OF COMPANIES
Before taking an investment decision on a stocks, even if it is a "brand name" with seemingly predictable growth prospects, a solid understanding of its financials always is very necessary for any investor. You don't have to be an expert or get too far into the weeds. However, if you want to be a savvy stock investor, you should understand the importance of crucial financial concepts, such as Return on Equity and free cash flow. That's particularly true, if you're considering an investment in a company that may become involved in future uncertainties. Think of financial statements as a company's medical charts, and you the doctor who's using these charts to determine a diagnosis as to the company's financial health. Here are the "Big Three" pointers in any financial statement: • The balance sheet of a company gives a snapshot of its financial health condition. The majority of public companies publish an interim balance shee...