Interpreting the Statement of Cash Flows: Operating, Investing, and Financing
A lot of critical information can be learned from the statement of cash flows. As cash flows to shareholders are what investing is all about, being able to understand all the great information provided by the cash flow statement is very valuable stuff to investors. When doing a valuation, investors will be able to adjust […]
Where to Find Operating Income in the 10-k and What it Says About a Business
A company’s operating income is the profit associated with regular business operations before considering the financial leverage of the business, and its associated interest expense, as well as taxes. Operating income sits in the middle of the income statement, as seen below in a snapshot of Coke’s income statement. Operating income is the income left […]
How Cost of Goods Sold (COGS) Can Help Find Great Company Moats
A company’s Cost of Goods Sold, or “COGS” for short, are the costs directly associated with the goods that the company sells. COGS are variable depending on how many sales take place which means that if a sale does not take place, then these costs are not incurred. For companies which sell customers a service, […]
Quality of Earnings & Reporting
Reporting quality and earnings quality are two sides of the same coin used to judge a company as a potential investment. Analysts need to first make an assessment of the reporting quality of the company before they can begin to rely on and interpret the reported financial information to make judgments about the earnings quality […]
Inconsistency with Shares Outstanding in Company 10-K Annual Reports
There are a few obstacles that can come up when using fundamental analysis to find stocks with both a solid business model and an adequate margin of safety. One that I noticed when I first started, and that I’ve been receiving numerous emails about from new Value Trap Indicator spreadsheet clients, stem from the inconsistencies […]
