My book, “Choose Stocks Wisely: A Formula That Produced Amazing Returns,” communicates in step-by-step fashion the usefulness of the balance sheet to finding a buying price on a common stock. As stated before, a share of stock is a share of company equity. Equity is found only on the balance sheet.

Also found only on the balance sheet are a company’s assets (resources) and its liabilities (obligations).  The excess of the assets over the liabilities is equal to the equity of the company. Since equity is equal to the residual after subtracting liabilities from assets, equity is also referred to as “net assets.”

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