Advanced fundamental analysis(part 2)

Balance sheet

• Cash + other short term investments = total cash

• Net receivables is the amount of money that the company is owed by other companies or banks etc

• Total current assets are the assets that can be converted into cash within the next twelve months

• Gross property plant and equipment - depriciation = Net property plant and equipment

• Current liabilities is the money the company has to pay back within next 12 months

• Accounts payable is the moneyy they have to pay to creditors

• Retained earnings is the net income after paying dividend to the shareholders

• Total stockholders equity is total assets - total liabilities

• Accumulated comprehensive income or losses is the unrealised gains or losses the company had during the year.

• If share capital under shareholders equity keeps increasing, it means that the company is diluting the shares more and more and you don't want too much of it happening

Cash flow

• Change in current working capital = current assets - current liabilities(how much money they generated)

• The negative accounts receivable shouldn't be increasing, you want it to keep decreasing

• Inventory - the cash that company spent on the goods, its negative coz the cash flows out

• Net cash provided by operating - Its the cash they generate from day to day activities, you want it to be positive and increasing

• Cash flow from investing activities is negatiive as its outflow of cash.

• Investments in property, plant - is the money used for buying the goods that the company itself uses

• Aquisitions is the money intel spends on buying small startups and other companies

• Purchases of investments is the money they spend on buying shares of other companies of bonds and other securities

• Sales/ maturities of investments is inflow of money, its profit the company may has made by buying shares of another company or any other profit made from securities.

• See where most of the money of ‘net cash used for investing activites’ go to

• If you see that company has a lot of short term + long term debt in the balance sheet, but they aren't paying back debt as shown in debt repayment(cash flow) then its a bad sign

• Slow increase in dividends paid is good sign, you don't want too much to be given out as dividends, and debt repayment takes priority over dividends

• Net change in cash you want it to be slowly increasing, don't want it to be negative

• Operating cash flow is cash generated from day to day operating activities

• Free cash flow is the cash that the company can spend on whatever they want - free cash flow you want it to be positive and increasing

Keep investing.