Chapter 16 preview
Chapter 16: Fundamental Analysis
Chapter 16 covers fundamental analysis: how to read financial statements and calculate key ratios. EPS = net income ÷ shares outstanding. P/E = price ÷ EPS. Current ratio = current assets ÷ current liabilities; quick ratio excludes inventory. Debt-to-equity measures leverage. Working capital = current assets − current liabilities. These ratios help assess profitability, liquidity, and leverage — the foundation of individual security analysis.
Chapter summary
Chapter 16 covers fundamental analysis: how to read financial statements and calculate key ratios. EPS = net income ÷ shares outstanding. P/E = price ÷ EPS. Current ratio = current assets ÷ current liabilities; quick ratio excludes inventory. Debt-to-equity measures leverage. Working capital = current assets − current liabilities. These ratios help assess profitability, liquidity, and leverage — the foundation of individual security analysis.
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Key concepts
- Fundamental Analysis
- Analyzing Financial Statements
- Analyzing Financial Statements
- Identify the components of the balance sheet: current assets, long-te...
- Calculate working capital = current assets - current liabilities; ide...
- Identify the income statement components: revenue, cost of goods sold...
- The Balance Sheet
- Components of the Balance Sheet-Assets
- The Liabilities Section
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