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Balance Sheet Analysis

Balance Sheet Analysis

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Published by: kishorepatil8887 on Mar 31, 2010
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Now that you have completed this section, you should be familiar with some basic methods to
help you evaluate different investment options.

Using the analysis techniques that we have introduced, you have a good basis of knowledge from
which to make informed investment decisions. Remember that the main purpose of the income
statement is to report profitability. Because profitability is crucial in any investment decision,
knowing some basic techniques of how to analyze the income statement should be a very
important part in your development as an informed investor.

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Calculating Profitability Ratios

Introduction

Corporate earnings are important to you as an investor. If you compare corporate earnings of
prospective investments, you will make wiser investment decisions. Profitability ratios provide you
with tools you can use to make these comparisons.

In this section you will learn:

•How Do I Use Fundamentals to Make an Investment Decision?
•What Is Ratio Analysis?
•What Can I Learn from Profitability Ratios?
•When Is an Increase in Earnings a Loss?
•How to Use Profitability Ratios to Make Investment Decisions
•Other Ratios to Consider

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