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CTSSHAH
@ctsshah
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#BalanceSheet #InvestopediaCliffNotes So to be completely honest investigating and making sense of a balance sheet is a lot of work. If I did this much investigation for every single dollar that I invested ... well I wouldn't invest that much or literally would be invested in 5 companies max. This is one more reason why there is literally no shame in just dollar cost averaging a few ETFs such as the S&P500 and a couple sector ETFs ... maybe sprinkle in some bonds, REIT, dividends and call it a day. The Breakdown: - "In short, the balance sheet is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders." - Investopedia - Balance Sheet can be summed up by Assets = Liabilities + Shareholders' Equity - Assets are what a company owns which is paid for by borrowing money / liabilities or from capital raised from investors / shareholder equity How do I find a company's balance sheet? - This can usually be found on the company's website under investor relations - If a company can not file their quarterly statement w/ the SEC on time, then this should be considered a red flag What should I know about a company's Balance Sheet before Investing? - "It provides a snapshot of a company's finances (what it owns and owes) as of the date of publication." - Assets - cash, marketable securities (stocks/bonds), accounts receivable (what customers owe), inventory, prepaid expenses, fixed assets (building/equipment), and intagible assets (intellectual property). - Liabilities - long term debt, interest / wages / dividend / accounts payable, pension fund etc... - Shareholder Equity - amount of money attributed to owner/shareholder What are the downsides of a Balance Sheet? - It is not enough to examine a company's balance sheet alone, instead it is important to konw the context relative to the industry as a whole - Balance sheets of companies w/in different industries can not be compared as each industry might have unique financing issues, fixed liabilities, etc... - Balance sheet only shows a single point in time; however, income statement and statement of cash flow are required to give the whole picture - Creative accounting of depreciation and inventory allows for manipulation of balance sheets Resources: Investopedia / Video: https://www.youtube.com/watch?v=k97ut9px9Rw P.S.: So new episode of #MultipleBrokeragePersonalities also dropped this morning and it is on my Fidelity Individual Brokerage Account. Hope you enjoy it. #TeamFundamental #BuildingFinancialLiteracy #InvestInOthers #FeedYourBrain
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