Another college semester is winding down. This semester, I’ve taught a course on how to analyze the financial statements from the lender and investor perspectives relative to financial decisions made by these parties. The students have been wonderful and we have had a very spirited discussion across the term.
Of course, the proper analysis of a company’s balance sheet equity has been a central feature of the class since the amount and quality of the equity is a substantive portion of the basis for any decision to stake oneself financially to a company. Whether a banker looking to lend or a potential stock investor, the party putting funds into the company wants to know there’s ample collateral to support the decision.
Every company is unique in terms of its balance sheet equity composition and with regard to the managers who oversee the application of balance sheet resources to generate future profitability from operations. With the myriad of online venues available today at the literal touch of a finger for conducting financial evaluation, there’s little risk of any of us becoming bored with the challenge of proper analysis before making our investment choices.
As individual stock investors, we have to know how to use the financial statements as they are intended to be used in order to arrive at rational investment decisions. Ultimately, the decision to invest money is a judgment call and one must have a sound basis for making that judgment call.
It has been a very insightful and rewarding class. I appreciate the diligent effort Dr. Allen has made in revealing the steps necessary to qualify a balance sheet. The research process he teachers is very systematic and thorough. Thank you Dr. Allen for this very helpful information.
Thanks, Perry. I’ve really enjoyed your helpful participation all along the way.