By Fundamental analysis deals with the analysis of a specific company and its financials. Every company is required to publish the financials on quarterly and yearly basis. These statements are very helpful in understanding the accomplishment of the companies in financial terms.
The most important financial statement are
- Income Statement (aka Profit and Loss Statement)
- Balancesheet
- Cash Flow Statement
Income statement is for specific duration – for year or a quarter. It tells about the revenue (sales), cost of goods sold, operating expenses and the profit by the company.
Balance Sheet – This is point in time statement of account with respect to asset of the company (what company owns) and the liability of the company (what company owes). It also shows, what is the networth of the shareholders – meaning what is owned by share holders. This is always presented as at date. For eg. Balance Sheet as at 31st March 2020.
Cash Flow Statemement – Cash flow statement indicates the cash flow of the companies during a specified period. There are three major headings for the cash flow statement. Cash Flow from Operations, Cash Flow from Investments and Cash Flow from Financial.
All the statesments are inter-related and provides insight into the company. You can read the whole 200 page about the company or just spend 15 mins reading the financial statements (Balance Sheet, Profit and Loss Statement and Cash Flow Statement).
One can gain a whole lot information, in minimal possible time, just from reading the balance sheet. Way to go !!!