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Type of Securities Investment Strategies Fundamental Analysis Technical Analysis
Understanding Financial Statements Income Statement Analysis Balance Sheet Analysis Cash Flow Analysis Shareholders' Equity Analysis Ratios and Definitions


Balance Sheet Analysis

 - Leverage and financial
   strength affect share value

 - Liquidity concerns can
   decimate a business

 - Cash is critical, to a point
    * Window Dressing
    * Cash Gap
    * Cash per Share
    * Burn Rate

 - Marketable Securities

 - Receivables are interwoven
    with cash flow
    * Past Dues and Write-offs
    * Receivables turnover
       ratios
    * Securitizations

 - Inventory - focus on the
    profit margins
    * Perpetual vs. Periodic
       Inventory
    * Inventory Accounting
       Calculation
    * Inventory Costing
       Methods
    * Lower of Cost of Market
    * Inventory Categories
    * Inventory Turnover Ratios

 - Fixed assets are necessary in
   order to be a world class
   company

 - Liabilities with equity
   attributes are enriching

 - Emphasizing debt net of cash
   can be misleading

 - Book value is a tool to
    properly evaluate a stock

 - Off-balance sheet assets and
   liabilities are legal

 

   


Balance Sheet Analysis

Young adults should stop viewing at the balance sheet as a snap shot of the financial position of a company at any one point of time. Thatís an accountantís view.

The balance sheet provides a wealth of information that can help individuals better understand their investments, to maximize their potential returns. Itís more, however, than what the company owns, owes and is worth. It shows a companyís potential, as well as providing insight as to its downside. Investors need to relate the profits and cash generated by the business with its available resources. This section identifies investment concepts where using the balance sheet can help you make sound investments decisions.

 

10 Investment Concepts

  - Leverage and financial strength affect share value
- Liquidity concerns can decimate a business
- Cash is critical, to a point 
- Receivables are interwoven with cash flow
- Inventory - focus on the profit margins
- Fixed assets are necessary in order to be a world class company
- Liabilities with equity attributes are enriching
- Emphasizing debt net of cash can be misleading
- Book value is a tool to properly evaluate a stock
- Off-balance sheet assets and liabilities are legal

 

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