Financial Statement Analysis For Successful Investment

One of the key components of long-term investing is finding strong companies that will have a consistent dependable growth pattern. Proper value investments can be achieved through financial statement analysis of stock(s) you are interested in investing in.

Income statement

The income statement or profit and loss statement provides details of a companies revenue and expenses. This information is important for current and future valuations.

Revenue

It is important to not only see the way a company is trending (Revenue up or down) but to know why. There are a couple common causes for increased revenues.

Price

Increases in price with proper marketing will increase revenue. Apple is famous for charging a premium price for products and selling them at large volumes. They are successful because they have exceptional marketing and create new desires for consumers. The Macbook, for example, provides minimal added functionality to comparably priced laptops but the combination of hardware and software creates an extremely desirable product. It is important to be able to evaluate qualitative factors that will be demanded by the marketplace.

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