Introduction
The massive amount of
numbers in a company's financial statement can be bewildering
and intimidating to many investors. On the other hand, if
you know how to read them, the financial statements are a
gold mine of information.
Financial statement analysis is the biggest part of fundamental
analysis. Also known as quantitative analysis, it involves
looking at historical performance data to estimate the future
performance. Followers of quantitative analysis want as much
data as they can find on revenue, expenses, assets, liabilities,
and all the other financial aspects of a company. Fundamental
analysts look at this information for insight into the performance
of in the future. They don't ignore the company's stock price;
they just avoid focusing exclusively on it.
Before we learn different ways to estimate
future performance, it is important to understand the basics
of the financial statements (both quarterly and annual reports).
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