Publicly traded companies' financial statements are available online. A few areas to view and download
- https://finance.yahoo.com
- https://www.google.com/finance
- https://www.sec.gov/edgar/searchedgar/companysearch.html
How much money the company took in and what the company's expenses were over a given period of time (quarterly or annually). Used to help understand the economic and financial health of a company. Sometimes referred to as a profit and loss statement (P&L) and is one of the most important income statements.
- Total Revenue: The money the company has brought in across all it's products and services
- Cost of Revenue (also known as Cost of Sales or Cost Of Goods Sold(COGS)): Cost associated with providing products and/or services. Doesn't include sales costs, salary, etc.
- Gross Profit: Profit made after deducting COGS.
- Selling, General & Administrative: expenses incurred to promote,sell and deliver products and services. Also includes costs to manage company (salary, benefits).
- Operating Income or Loss (sometimes known as Earning before interest, taxes, depreciation and amortization or EBITDA): Typically a financial indicator of a company's efficiency and profitabilty. Amortization is paying of debt on a fixed repayment schedule.
What: Shows how revenue grew/declined between two different time periods
How: (total revenue of period X - total revenue of comparison period) / total revenue of comparison period
Example: (156,508,000 - 108,249,000) - 108,249,000 = revenue growth rate of 44.58%
What: Shows how much of total revenue a company got to keep. Gross profit margin measures the ability of the company to cover its direct costs.
How: (gross profit / total revenue)
Example: 68,662,000 / 156,508,000 = gross profit of 43.87%
What: Show percentage of revenue that goes to research and development. Often times, analysts want to see a R & D ratio of 0 because it shows the company has a tangible product/service that doesn't need upgrades on a regular basis. However, this varies based upon market segment and product.
How: (r&d costs / total revenue)
Example: 3,381,000 / 156,508,000 = r & d ration of 2.16%
What: Shows percentage of revenue spent on selling products and running the company
How: (SGA / total revenue)
Example: 10,040,000 / 156,508,000 = SGA ratio of 6.42%
What: Shows how much a company keeps after operating expenses, in relation to its revenue. Measures the ability of a company to generate a profit after covering costs for producing and selling its products, building its product pipeline (R&D), and meeting overall corporate expenses.
How: (Operating Income & Loss / total revenue)
Example: 10,040,000 / 156,508,000 = operating margin of of 35.29%.
What: Shows much tax is paid on earnings. Tax rate volatility makes objective analaysis of a company's net profit performance difficult to determine.
Read more: Profitability Indicator Ratios: Effective Tax Rate | Investopedia http://www.investopedia.com/university/ratios/profitability-indicator/ratio2.asp#ixzz4XYBxf72C Follow us: Investopedia on Facebook
How: (Income Tax Expense / Income Before Tax)
Example: 14,030,000 / 55,763,000 = tax rate of 25.16%
What: Shows the percentage growth of net income. It is possible that the net income growth rate is higher than revenue growth rate. Typically this can happen is if expenses is going down.
How: (Net Income of period x - net income of period y) / net income of period y
Example: (41,733,000 - 25,922,000) / 25,922,000 = net income growth rate of 60.99%
What: Shows how much money a company keeps in relation to revenue and illustrates a company's effectiveness in covering operating costs, financing and tax expenses.
How: (Net Income applicable to common shares / total revenue)
Example: 41,733,000 / 156,508,000 = net profit margin of 26.66%. Another way to look at this: For every dollar a company brought in as revenue, they got to keep 26 cents of it.
Shows what a company owns (assets), what it owes (liabilities), and what's left over (stockholder equity). Shows a snapshot in time of what is going on with a company. Shows the economic and financial health of a company and helps determine the book value of a company.
- Cash & Cash Equivalents: cash and other items that can be converted to cash almost instantly
- Short Term Investments: debt or equity security meant to be sold or converted into cash wthin the next 3 - 12 months
- Net receivables: Money that is owed to the company for something that they have sold
- Inventory: inventory on hand that can be sold within one year
What: Shows the percentage growth of cash the company has on hand. Used in analysis of operating strategy and whether the company needs cash on hand at all times to run its business.
How: (Cash & Equivalents of period x - Cash & Equivalents of period y) / Cash & Equivalents of period y
What: Shows the percentage change in the investments the company has made. Could impact non-recurring or non-operation income on the income statement.
How: (Short Term Investments of period x - Short Term Investments of period y) / Short Term Investments of period y
What: Net receivables measures the effectiveness of a company's to collect payment. This shows the percentage change of the amount of net receivables.
How: (Net Receivables of period x - Net Receivables of period y) / Net Receivables of period y
What: Shows the percentage change of inventory on hand. This can be used in analysis of a company's operating strategy.
How: (Inventory of period x - Inventory of period y) / Inventory of period y
What: Measures a company's ability to pay short-term and long-term obligations (liquidity). A high ratio can be a sign that the company has problems managing working capital. A low ratio (below 1) can be a sign the company has problems meeting short-term obligations.
How: Total Current Assets / Total Current liabilites
Describes the sources of a company's cash and how it was spent over a specified period of time. Useful for determining short term viability of a company. Something to keep in mind - there are two different types of accounting methods: accrual and cash. Accrual method reports revenue and expenses at time of transaction. Cash method reports revenue and expenses at time they are actually paid. The Cash Flow Statement helps an accrual-basis company get a sense of how it's doing on a cash basis.
- Net Income: The "bottom line", taken from the income statement
- Total Cash Flow from Operating Activities: Net Income plus/minus any adjustments or changes
- Capital Expenditures: Funds used to upgrade or acquire physical assets. Also referred to as CAPEX. The lower, the better.
- Total Cash Flow from Investing Activities: Includes cash spent/earned from capital expenditures and investments
What: Measures what percentage of net income goes to CAPEX. The lower the percentage, the better.
How: (Capital Expenditures / Net Income) * -1
What: Measures what percentage of net income goes to investments.
How: (Investments of period x - Investments of period y) / Investments of period y