Easy Question, Please help
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.
cash flow
Statement of Retained Earnings, you got to find where those earnings are going.
income statement
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 wouldn't invest $10m of my own money based on public docs. That's suicide.
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
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.
Cash flow, enough said.
i devoured analysis and advice from "the motley fool".
the biggest one i remember? CASH IS KING.
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