Profit Margins : The key to reading a company's story, understanding its pricing power, and decoding its core competitiveness from the income statement
This number tells a story. It shows you if the company has 'pricing power' and helps you spot its 'core competitive edge' just by reading the P&L.
ROE and ROA : Judging a company's efficiency and quality, is your money actually being put to good use?
These measure efficiency and quality. They basically answer the question: Is management actually any good at putting your money to work?
Is a higher 'Dividend Yield' always better? Watch out for high-yield traps and understand what dividends really are.
Is higher always better? Not necessarily. A super-high yield can be a red flag. You need to understand the nature of that dividend first.
Financial Markets
An overview of the ideas, methods, and institutions that permit human society to manage risks and foster enterprise.
How do you read 'Free Cash Flow' ? Why seeing a negative number sometimes isn't a bad thing.
How should you read this one? A negative number isn't always a bad thing. In some cases, it's actually acceptable.
Is a high 'Debt Ratio' always dangerous? You also have to look at their ability to pay it back.
Not just that. You also have to look at their ability to pay off that debt.
What are the 'Current Ratio and Quick Ratio' ? Think of them as the 'Financial first aid kit' for a company's ability to pay debts.
Think of these as the company's 'financial first-aid kit' for paying its short-term bills.
The Intelligent Investor
The classic text on value investing, providing realistic guidance on market psychology, diversification, and safety margins.
There is still plenty more to learn
Analyzing financial ratios helps you verify a company’s health. Once you confirm it’s a great business, the next step is calculating its intrinsic value to make sure you never overpay.