Darla SandyKnowledge Contributor
What's your approach to evaluating the financial health of a company before investing?
What's your approach to evaluating the financial health of a company before investing?
1. Review financial statements for profitability, liquidity, and solvency.
2. Assess revenue and earnings growth trends.
3. Calculate profitability ratios like gross margin and net profit margin.
4. Analyze liquidity and solvency ratios such as current ratio and debt-to-equity ratio.
5. Examine cash flow from operating, investing, and financing activities.
6. Evaluate the quality and sustainability of earnings growth.