What do you think are the important stats in a company's financial statement if you are going to invest in it?

Question

I'm learning on how to analyze the health of a company and if it is fundamentally sound.

Answer 1

Interesting.  Why would you want to know that?  You buying the company itself?  Probably not, probably buying the stock.  In that case, the finances reported by the company (and that is the only, repeat only, source of fundamental information) varies between questionable and worse.

If you are buying the stock, look at the stock price charts.  Going up?  The industry group going up?  Rate well against others in its field, chartwise?  Nothing matters except the price of the stock in the open market.  This disappoints a lot of economics professors, but psychology has a lot more to do with the market than fundamentals.

Answer 2

The best use of stats in assessing if a company is worth your investment is how those stats compare with the competition rather than what the numbers actually are.

Answer 3

Net Profit.

A company without profit must borrow to operate. That becomes a drag on the business. Also profit can help you gauge the future valuation of the company. Whereas negative profit leaves you guessing what future profit will be.

If a company isn't profitable, you might as well shake the 8-Ball for investing advice.

Answer 4

I like cash flow and debt ratios.  Return on Earnings (ROE) is a good measure to see how they do vs competition.