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Much financial and industry data is available for investor review. Note the more significant reports and...

Much financial and industry data is available for investor review. Note the more significant reports and factors you might analyze when assessing a corporation’s financial condition.

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The significant reports that one should look for when assessing the financial condition of a corporation are annual reports and the three main financial statements like balance sheet, Income or P&L statement and the cash flow statement.

The important part of the annual report is Management Discussion Analysis which gives insights into the historical, current, and future performance of a company. The person should also look art the 10 Q and 10 K filings of the company along wit management bulletins and press releases.

The important part of the financial statements are the Liquidity ratios like current ratio, quick ratio and the cash ratio which fives the short term liquidity ratio of the corporation.
The other ratios are the solvency ratios like debt to equity ratio, debt to assets ratio and Interest coverage ratio. This ratio gives the situation of the company on going concern basis.
The profitability ratio like net profit margin and operating margin should be analyzed. The performance of the company based on all the above ratios over a period of 5 years should be calculated for getting the idea of how well the corporation is performing.

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