How Can Investors Profit from Financial Statements?

Money Girl explains how investors can find the most profitable companies and make the most of their money.

Laura Adams, MBA,
November 21, 2013

How Investors Can Profit from Financial StatementsQ: I'm interested in buying stock funds in my retirement account, but I don't know how to tell if the underlying companies are making money. What's the best way to know if a company is really profitable?

A: Every publicly traded company in the U.S. is required by the Securities and Exchange Commission (SEC) to disclose their financial information on an annual report called a Form 10-K. It includes a variety of information such as the company history, executive compensation, equity, and financial statements. The SEC has a lookup tool where you can get access to 10-K filings for over 20 million companies.

To determine whether a company is profitable, look at a financial statement called the Income Statement. It includes key indicators like sales revenue, operating expenses, and net income. At the end of the day, net income is what matters most. You should also compare a company's net income to that of its competitiors, to see how well it's doing within a particular industry.

However, there are several major financial statements, and no one report tells the whole story. In combination, they provide potential investors with powerful information to invest wisely.

But if you think you need an accounting degree to read and understand financial statements, think again! Join me, Money Girl, for a live webinar that will take the fear out of understanding financial statements and give you plenty of confidence to make smart investment decisions. 

Find out how to use these easy skills to become more valuable to your company or to grow your own business. We'll discuss essential financial concepts and jargon you need to know - in simple, everyday language. You'll learn how to demonstrate return on investment (ROI), create a better budget, make decisions based on cash flow, and much more.

So register for Understanding Financial Statments: A Step-by-Step Tutorial. I'll present this live 75-minute webinar on Tuesday, December 3, 2013 at 2pm Central Time (that's 3pm Eastern and 12pm Pacific). 

Profit/loss image courtesy of Shutterstock.

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