Chapter--9 --- Financial Statement Analysis Introduction

Описание: Title: Chapter 9 – Financial Statement Analysis Introduction | The Foundation of Company Valuation

To truly understand a company’s performance, you need to look beyond the share price — into its financial statements.
In this chapter, we introduce you to the core of equity research and business analysis — Financial Statement Analysis.

Financial statements reveal how efficiently a company operates, how healthy its balance sheet is, and how sustainably it can grow.
Every research analyst, investor, or finance student must master this skill to identify hidden strengths and red flags in a company’s financials.

💡 1️⃣ What Is Financial Statement Analysis?
It’s the process of reviewing and evaluating a company’s financial statements — the Balance Sheet, Income Statement, and Cash Flow Statement — to assess its profitability, liquidity, solvency, and operational efficiency.

📘 2️⃣ The Three Key Financial Statements:

Balance Sheet: Snapshot of assets, liabilities, and shareholders’ equity.

Income Statement: Shows revenue, expenses, and profit performance.

Cash Flow Statement: Tracks how cash moves in and out of the business.

🔍 3️⃣ Why It Matters for Investors:

Understand whether profits are real or accounting-driven.

Evaluate how efficiently capital is being used.

Identify leverage and liquidity positions.

Compare growth trends across periods or peers.

Judge the company’s intrinsic value and risk profile.

📊 4️⃣ Common Techniques in Financial Analysis:

Ratio Analysis: Profitability, liquidity, efficiency, and solvency ratios.

Trend Analysis: Reviewing performance over multiple years.

Comparative Analysis: Benchmarking against competitors or industry averages.

🏦 5️⃣ Real-World Applications:
Financial statement analysis helps investors:
✅ Make better stock selection decisions.
✅ Assess dividend potential and debt repayment ability.
✅ Predict earnings sustainability.
✅ Detect early signs of distress or manipulation.

🎯 Key Takeaway:
Financial statement analysis is not just about reading numbers — it’s about interpreting them to understand the story behind a company’s performance.

📘 This video is part of the Free NISM Research Analyst Course, designed to build your foundation in equity research, financial modeling, and valuation techniques.

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