Simple Investment Research Process - for Beginners | Summary and Q&A

TL;DR

Learn a step-by-step process for conducting due diligence and analyzing companies to determine if they are worth investing in.

Key Insights

• 👨‍💼 Start the investment research process by understanding the business model and future prospects of the company.
• 💐 Analyze the cash flow statement to assess the company's cash generation and trends.
• ❓ Evaluate the income statement to understand revenue, profit margins, and dividend-paying capability.
• 😒 Use the balance sheet to assess financial strength, compare with competitors, and analyze debt levels.
• ⏳ Calculate free cash flow to determine investability and analyze trends over time.
• ↩️ Consider basic metrics like return on equity and return on assets to assess management efficiency.
• 💁 Obtain information from a company's investor relations page, accessing annual and quarterly reports.
• 🧚 Determine the fair value of the company to decide if it is worth buying and at what price.

Transcript

hi i'm jimmy so this video is a simple investment research process that we can use for almost any company in any industry in any country it's a very simple process that lets us get a good understanding as to whether or not this company is worth putting on the maybe buy list before we then try to come up with the fair value and identify where we sho... Read More

Questions & Answers

Q: What is the first step in the investment research process?

The first step is to understand the business by reading the business section of the annual report or management discussion and analysis.

Q: How can the cash flow statement help in assessing a company's financial health?

The cash flow statement, especially the cash flow from operations section, provides insight into how much cash the company generates and its trends. Analyzing cash flow from investing and financing sections can also provide valuable information.

Q: What should be considered while analyzing the income statement?

The income statement helps in understanding revenue, profit margins, growth rates, and the company's ability to pay dividends.

Q: How can the balance sheet be used to assess a company's financial strength?

The balance sheet helps in comparing assets to liabilities, understanding short-term and long-term assets, and analyzing debt levels. It is also important to compare these numbers with competitors in the industry.

Summary & Key Takeaways

• The video provides a simple investment research process that can be applied to any company in any industry.

• Start by understanding the business through the business section of the annual report or management discussion and analysis.

• Analyze the cash flow statement, income statement, and balance sheet to assess the company's financial performance and trends.