Educational materials nr.2
Hello dear community, wish you have good day.
As it was in educational materials number 1, for analysis of company actively use metrics. They include calculation financial data from financial statement. This calculation uses to compare with other companies in sector and to compare with history of company. Metrics are part of complex analysis. Sources of metrics can be taken from Morning Star, GuruFocus and other.
Bad meanings of metrics do not mean, that company is bad. On metrics have influence external factors and all financial data are based on a last published statement. That is why this indexes are analyzed with financial statements of the company. For example, big debts can be general characteristic of sector.
We can make classification metrics as:
1) Based on income statement. Used to understanding overvalue/undervalue of company at moment.
2) Based on Cash Flow statement. Indicator of financial health of the firm.
3) Based on Balance sheet. Useful when you need to understand structure of the equity, assets and debts – indicate money-management of the company.
Exist many other metrics, but they are used in special methods of analysis of company.
Pros:
1. Easy to use and interpretation;
2. Some objectivity in analyzing of company;
3. Easy-to-understand calculations;
Cons:
1. Exist risk of manipulation of financial data in financial statement. Some guarantee exist, when company have an audit;
2. Need to check financial statement;
3. Do not give all-include analysis, needs research of environment and sector of the company;
Metrics are good in analysis of the company: easy-to-use, objective, possibility to understand situation on market and comparing with competitors. But they must be complete with qualitative analysis. This is comparing with competitors, analysis of market and research of financial statement.
Wish You have big profits and good investment,
Financial analyst and advisor - Valerii Selin
As it was in educational materials number 1, for analysis of company actively use metrics. They include calculation financial data from financial statement. This calculation uses to compare with other companies in sector and to compare with history of company. Metrics are part of complex analysis. Sources of metrics can be taken from Morning Star, GuruFocus and other.
Bad meanings of metrics do not mean, that company is bad. On metrics have influence external factors and all financial data are based on a last published statement. That is why this indexes are analyzed with financial statements of the company. For example, big debts can be general characteristic of sector.
We can make classification metrics as:
1) Based on income statement. Used to understanding overvalue/undervalue of company at moment.
2) Based on Cash Flow statement. Indicator of financial health of the firm.
3) Based on Balance sheet. Useful when you need to understand structure of the equity, assets and debts – indicate money-management of the company.
Exist many other metrics, but they are used in special methods of analysis of company.
Pros:
1. Easy to use and interpretation;
2. Some objectivity in analyzing of company;
3. Easy-to-understand calculations;
Cons:
1. Exist risk of manipulation of financial data in financial statement. Some guarantee exist, when company have an audit;
2. Need to check financial statement;
3. Do not give all-include analysis, needs research of environment and sector of the company;
Metrics are good in analysis of the company: easy-to-use, objective, possibility to understand situation on market and comparing with competitors. But they must be complete with qualitative analysis. This is comparing with competitors, analysis of market and research of financial statement.
Wish You have big profits and good investment,
Financial analyst and advisor - Valerii Selin
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