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How of you dig deep into financial statements prior to buying a stock? How long do you typically spend analyzing one company?

I'd like to learn how to read them so I can feel more comfortable picking my first few stocks. Are there websites that explain how to analyze a financial statement? Suggestions?

Thanks!
 

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How of you dig deep into financial statements prior to buying a stock? How long do you typically spend analyzing one company?

I'd like to learn how to read them so I can feel more comfortable picking my first few stocks. Are there websites that explain how to analyze a financial statement? Suggestions?

Thanks!
I would suggest heading to Chapters (or similar) and browsing through some books that focus on the basics of financial statements. I'm reading one right now called "Financial Statements Demystified".
 

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Discussion Starter #5
Thanks everyone.

FT, please post your comments about the book once you are finished reading.

Here are two other books that have great reviews.
1- Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Report
2- How to Read a Financial Report: Wringing Vital Signs Out of the Numbers
 

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I have read a lot financial statements for American companies... so if Canadian companies follow the same format... I'd always look at the balance sheets for the past few years and make sure they are really, really solvent. Then take a look at the income statement and take note of the equity figure.

Aside from the monthly and quarterly financial statements, take a look at its annual report. This is more comprehensive and it has details regarding its affiliates and it's network of associated companies and how these companies are doing. You also have info about the legal cases the company's been involved with.

If it's a really big company you are going after, then check it's ratings from Moody's, S&P, and Fitch. See if it has an investment-grade rating.
 

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One of the things that you have to do is go through the notes. It is easy to make a balance sheet or income statement look good when it may not actually be, but most of the interesting things, if they are there, have to be disclosed in the notes to the financial statements.
 
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