Get Rich this Recession with Balance Sheet Basics for Top Stock Picks
Why do stock analysts dwell more on Profit & Loss statements than on Balance Sheets? Is this financial analysis trend an extension of putting top lines ahead of Net Profits and Cash Flows? Do not blame stock brokers for luring you in to needless daily stock trading. Your own mind is responsible.
Splitting hairs between a recession and economic slow down will not help your stock investing. Why not adopt a whole new approach to financial planning Well not really new, because balance sheets have always been around. What we really want to say is that look at the following ratios before you invest in stock:
- Are current assets valued truthfully? Could there be some sub prime debts that will never be paid? Do any toys with lead from China lurk in inventory lists?
- How much equity do sovereign funds own? Could whimsical private equity plug the plug and flush your stocks down the sink?
- Does the stock have a professional bulwark of reserves? Is the company so highly leveraged that Bernanke could order a fire sale over breakfast?
- Are provisions complete? Could there be a class action suit around the corner that crony auditors and credit rating agencies have ‘overlooked’?
- How much would be left for your stocks if all company fixed assets were foreclosed, and if influential debtors were paid off first?