5.S: Summary

Last updated
Save as PDF

Page ID: 83383

\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \) \( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)\(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\) \(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\)\(\newcommand{\AA}{\unicode[.8,0]{x212B}}\)

Congratulations ‒ You Have Finished Chapter 5 ‒ Fundamental Analysis: Financial Statements and Ratio Analysis

You have reached the end of chapter 5, Fundamental Analysis: Financial Statements and Ratio Analysis. In this chapter, you have:

Explored the three quarterly and annual financial statements that every publicly traded company must produce: the balance sheet, the income statement, and the cash flow statement (aka statement of cash flows)
Investigated Regulation FD (Fair Disclosure) and how financial statements and other important data about companies are disseminated
Reviewed some common stock ratios first discussed in chapter 3 and been introduced to new common stock ratios and price ratios
Been introduced to profitability ratios, liquidity ratios, activity ratios, and leverage ratios

You should now be able to:

Describe the uses of the three quarterly and annual financial statements
Research or calculate various financial ratios for publicly traded companies
Discuss the benefits and major limitations of various valuation models
Analyze and compare and contrast the various financial ratios for publicly traded companies with their competitors and the stock market as a whole

We Have Finished Our Coverage of Fundamental Analysis of Stocks

Dear Investment Gurus, we have done the heavy lifting with regard to stocks. It is now time to step back and take a look at much of the research that has been done regarding whether or not any of what we have learned will actually do us any good. In our next chapter, we discuss Efficient Market Theory and ask a simple question, “Who Can Beat the Market?” We will also focus on the research that has been done regarding behavioral finance and what it can tell us about ourselves as investors and as human beings. Last, we review some of the All Stars of Investing. If you want to do something well, why not study and learn from those who have shown that they can do it well? See you in our next chapter, Chapter 6: Efficient Market Theory: "Who Can Beat the Market?"