7 HABITS FOR FINANCIAL ANALYSIS

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Habit #1 - Read the Annual and quertery Reports Before the Earnings Season Starts
At a minimum, read and review these 10-K sections:
1. Business Overview
2. Industry Overview and Competition
3. Management’s Discussion and Analysis (MD&A) of the Period Covered
4. Cash Flow Statement
5. Balance Sheet
6. Income Statement
7. Footnotes to the Financial Statements
8. And last, but most important, Key Risk Factors

Habit #2 - Maintain Spreadsheets of Historical Company Financial Statements
Habit #3 - 'Never Assume That Increased Revenue & Net Income Mean That a Company Is MakingMore Money
Habit #4 - Always Review the Cash Flow Statement First
Habit #5 - Review the Balance Sheet in Terms of Ruppes and % of Total Assets
Habit #6 - Review the Income Statement Items Both in Terms of Dollars and as a % of Total Revenues
Habit #7 - Read the Company’s Earnings Release

Always read the footnotes to financial statements. A majority of the truth of the company’s health is buried here; the numbers alone rarely tell the full story. Take time to review and ask questions regarding any vague statements. ..... Mahesh Hamne
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