Friday, February 26, 2016


Describing the value of a company is important to making decisions, and lots of things can be learned from looking at a balance sheet.  I learned to do all this in business school, but I haven't practiced it since the early 1980s.

A little homework is in order, so I've been doing a little research, and I'm going to leave this link right here so I can find it later.  LINKY TO BASIC BUSINESS FINANCIALS.  All investors should be able to get a balance sheet and an income statement.  Most of what we need to evaluate a company's health is right there.  Business is about numbers and those are the numbers.

For example, if you're trying to figure out the intrinsic value in one share of a company's stock, you'd do well to find its net worth (assets minus liabilities) .  Divide the result by the number of shares outstanding and you have the book value of one share.

It's good to remember these things, and the ratios sometimes escape me.

1 comment:

Old NFO said...

Seems like most people blindly follow the 'advice' of advisors (Paid by whom???) to tell them what to invest in, without doing ANY due diligence!