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Easy Question, Please help
 

Freebanker's picture
IB
 
Points)
 on 9/30/08 at 9:47pm

If you have 10 million to invest in a company, which financial statement (balance sheet, statement of cash flows, income statement) would you look at to get info on the company and what specific pieces of data?

Thanks.

Tags:
indian-banker's picture

cash flow

IB
 
Points)
 on 9/30/08 at 9:59pm

cash flow

bearing's picture

Statement of Retained

ER
(Neanderthal, 2,082
 
Points)
 on 9/30/08 at 10:06pm

Statement of Retained Earnings, you got to find where those earnings are going.

WesternWildOut's picture

income statement

IB
 
Points)
 on 9/30/08 at 10:43pm

income statement

Cornelius's picture

quoth the banker...watch

(King Kong, 1,707
 
Points)
 on 9/30/08 at 11:05pm

quoth the banker...watch cash flow

i would say cash flow statement and others have said the balance sheet.

at the end of the day, as long as you have a reason to explain why that financial statement and not the others, you'll be straight.

cash flow adjusts for accruals and any non-cash outflows. the income statement does not.
it shows where the money is going (ie capex) and where it is coming from (financing activities, net income adjusted for D&A and increases in A/R and A/P).

the balance sheet is a snapshot of a company's financial health at a specific point in time. so you could make the argument that balance sheet would be best statement to examine when making an investment because you can see who's in the capital structure and if they have enough cash/assets to cover the debt, interest expense, etc.

------------
I'm making it up as I go along.

CKnew's picture

...

IB
(Chimp, 0
 
Points)
 on 10/1/08 at 6:23am

I wouldn't invest $10m of my own money based on public docs. That's suicide.

RWP's picture

short run: cash flow long

PE
(Baboon, 120
 
Points)
 on 10/1/08 at 9:28am

short run: cash flow
long run: income statement, since you don't care about the short term accruals adjustment and all you want to know is how profitable the company is, which you can tell from the income statement

not sure if you will need the balance sheet since you can guess how it looks like by looking at the income statement and cash flow

though the question is also industry specific, for FIG you def. don't need the cash flow statement

giocatoredoro's picture

Cash Flow Period.

IB
 
Points)
 on 10/1/08 at 10:23am

Cash Flow. While natural instinct is to say the income statement, that is incorect because the income statement has many accurals in it. A firm may be profitable on the income statement but still go out of business if it does not have the cash needed to run its operations. The balance sheet is incorrect because you can see most of the changes of the balance sheet reflected in the cashflow statement.

MDR's picture

Cash flow, enough said.

IB
(Gorilla, 513
 
Points)
 on 10/1/08 at 11:55am

Cash flow, enough said.

wintonheights's picture

in my greener days

EN
(Orangutan, 333
 
Points)
 on 10/1/08 at 12:40pm

i devoured analysis and advice from "the motley fool".

the biggest one i remember? CASH IS KING.

Revsly's picture

I'd agree with Cash Flow If

ST
(King Kong, 1,709
 
Points)
 on 10/1/08 at 6:04pm

I'd agree with Cash Flow

If you have two though, I'd say BS & IS because you'd then be able to back out the CF for the most part.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

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