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Old 08-31-2007, 03:50 PM   #6 (permalink)
billylou
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Join Date: Aug 2007
Location: british vancouver
Posts: 1
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Partnerships, sole ownerships, and limited liability companies (LLC) may not have to all of those reports. If it is a small, private company, then find out who the owners are and run background checks on them. The health of every company can be estimated from their Financial Reports (i.e. Income Statement and Balance Sheets). Get a copy if you can. Almost any company, except very small private companies, makes that information available.

With the financial statements, you can really start the financial analysis. (They will be in annual report.)
1. Profitability- its ability to earn income and sustain growth in both short-term and long-term, based on the income statement
2. Solvency- its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity- its ability to maintain positive cash flow, while satisfying immediate obligations. Cash flow is like your own weekly paycheck. If you run out of cash, and cannot buy gas or pay daily expenses, you will develop bigger problems right away because cannot drive to work and eat. Likewise, if a company stops paying its workers for a week, then everything stops.

Last edited by admin; 09-02-2007 at 06:14 AM.
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