In this video, learn how to compare and contrast financial reports from different companies within the same industry.
- In and around my home city of Provo, Utah…there are lots of startup software development companies.…These companies are constantly searching for sources…of financing, both bank loans and new owner investment.…Let's say that one of these companies comes to a bank…and asks for a loan.…Well the first thing the bank would ask for is…a copy of the company's most recent financial statements.…Let's say that these financial statements reveal…that the company's profit in the most recent year…was 748 thousand dollars.…Is that good news?…Or bad news?…Well, the number in isolation doesn't tell us…whether the 748 thousand dollars is good news or bad news.…
One thing the bank would do is to use the entire…set of financial statements.…The balance sheet, the income statement, and the…statement of cash flows.…To do some financial ratio analysis.…My brother and I have a separate course about…financial ratio analysis in our online library.…But what the bank would also do is compare this…company's financial statements to those of other…
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