Getting Easy to Read Financial Statements for a Company
Posted on | August 11, 2009 | No Comments
Perhaps you took my advice in yesterdays post about using the Graham Investor NCAV (Net Net) screener. What do you do with all those names? I start with the best discount to Net Current Asset Value. The bigger the discount, the bigger the theoretical Margin of safety. But when you are swimming in these waters, beware of the sharks. Many of the companies are failing and not worth investing in, because of high cash burn. High cash burn can mean that the company will deplete its assets before it can be turned around or liquidated.
The next step is to view the financial statements of a company. Ideally you want to get this information as easily as possible in a nicely laid out manner to simply input or capture into the spreadsheet you will be creating soon. But no spreadsheet today.
You could start with the 10k and 10Q statements that each company produces, but they are often convoluted and difficult to sort through. Remember we are just at the screening stage. There is a faster way. Later you will need to read through these documents when you are refining your profile on companies that look promising. But not today.
The best service for laying out financial records is Valueline. Warren Buffett has used them since the Dark Ages. Their numbers are advertised as the most accurate. But it is a subscription service that charges pretty hefty rates for the small time investor. No, if you are a beginning investor or short on investment capital, you don’t want to spend capital you would like to be investing.
That leads us to Morningstar. Yes they too have premium services. But, they also have the financial statments on thousands of companies. And those are free. Morningstar has the last decade (assuming a company has been around that long) of financials available. Gratis.
More on Financial Statements manana.
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