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Guides To Reading Balance Sheets

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Can anyone recommend a good guide to reading a balance sheet, or evaluating a company's value?

I'm thinking about investing in some companies I know a bit about and what to do some due diligence before I buy.

Never done anything like this before so advice gratefully received.

Can't point you to any resources. But I would say past perfomance is not a guarantee of future. And a balance sheet is a view of the past. Upcoming significant liabilities are also required to be stated if they are expected, so in that sense they do show the future (a little).

Get the companies annual report and look at what they are planning for the future. Where and what growth do they predict. Then the due diligence is to see if this is reasonable. Compare the figures in that with the prior years and they should be realtively easy to see from the balance sheet what the companies profits and costs were in each business area.

The report is key as it explains why figures are high or low. Without that it's all just meaningless numbers. That's why the balance sheet is usually an integral part of the report.

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Can anyone recommend a good guide to reading a balance sheet, or evaluating a company's value?

I've looked for a good book for ages - and I've not found one. I've no accountancy training - though I've managed to make some sense of simple balance sheets on occasions in the past. Recently I've tried to assess some more complex balance sheets (though nothing anywhere near as complex as a for a typical listed company) and have found this a very demanding uphill struggle. I get the distinct impression that what matters most is what's not said, rather than what is... but, without a common syntax, this makes amateur analysis all but impossible.

In the past, I thought balance sheet analysis would be a very effective task to crowd-source... the idea being that many eyes could help dissect even very complex documents - and where real world knowledge is needed to identify anomalies, this would again benefit from a collaborative effort. Potential problems arise that tentative negative remarks about a company might be considered libellous - and, to make matters worse, if analysis were done in public, there'd always be the possibility that the next accounts would take on board the analysis techniques in an attempt to convey the sort of picture the company's executives want.

I've no solutions - but I'm very interested in this general subject area...

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