Understanding Financials of a firm

 As we know, the share price of a firm, at least theoretically, are the discounted values of expected future cash flows. This method to value stock price, as discussed in the article, understanding financial markets, is called the discounted cash flow method. Knowing the future cash flows is a tricky business because it requires us to know about the company and the future prospects, strategies and much more. But there's a good way to know many, if not all, of these details. This can be obtained by reading the financial statements, especially, the company's balance sheet, the income statement and cash flow statement. Understanding what these statements are and what they imply is beneficial for investors. So, this article contains notes from different sources which I read to gain an understanding of these statements and how they can be used for investment purposes.

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