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Balance Sheet Analysis
- Leverage and financial
strength affect share value
- Liquidity concerns can
decimate a business
- Cash is critical, to a point
* Window Dressing
* Cash Gap
* Cash per Share
* Burn Rate
- Marketable Securities
- Receivables are interwoven
with cash flow
* Past Dues and Write-offs
* Receivables turnover
ratios
* Securitizations
- Inventory - focus on the
profit
margins
*
Perpetual vs. Periodic
Inventory
* Inventory Accounting
Calculation
* Inventory Costing
Methods
* Lower of Cost of Market
* Inventory Categories
* Inventory Turnover Ratios
- Fixed assets are necessary in
order to be a world class
company
- Liabilities with equity
attributes are enriching
- Emphasizing debt net of cash
can be misleading
- Book value is a tool to
properly evaluate a stock
- Off-balance sheet assets and
liabilities are legal
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Balance Sheet Analysis
Young adults
should stop viewing at the balance sheet as a snap shot of the financial
position of a company at any one point of time. That’s an accountant’s view.
The balance sheet provides a wealth of information
that can help individuals better understand their investments, to maximize
their potential returns. It’s more, however, than what the company owns,
owes and is worth. It shows a company’s potential, as well as providing
insight as to its downside. Investors need to relate the profits and cash
generated by the business with its available resources. This section
identifies investment concepts where using the balance sheet can help you
make sound investments decisions.
10 Investment Concepts
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