Financial
statement can reveal whether the company that we interested in will generate
money to us consistently. When we looking in the financial statement, we
looking on the “consistency”. Will this company able to generate income with
high gross margin consistently? Will this company able to maintain the expenses
consistently. Will this company able to generate the earnings consistently?
This consistency
is important to us for long term investment.
When we
look into the financial statement, there always have 3 statement which named as
income statement, balance sheet and cash flow statement. Each statements
provide us important information on the company that we interested in.
Income
statement reveal how much the company has earned during its operation. This
statement will be released every 3 months period by accountants and the whole
fiscal year. Info can be get from this statement are company’s margin, return
of equity, its consistency earnings, etc.
Balance
sheet reveal how much the company has the money in the bank and how much it’s
owes. The net worth of the company can be known after deduct all the debts from
their account. The balance sheet was generated every 3 month period which
called as quarter and at the end of the accounting or fiscal year.
Lastly, the
cash flow statement track the flow of the cash either in or out of the
business. We can know how the company spend their capital in their
improvements.
