Five Tips for Analyzing an Income Statement

Written by Christopher Mallon


Continued from page 1

A good Management Discussion and Analysis will give yourepparttar details you need to understandrepparttar 112604 items onrepparttar 112605 income statement. You should get segmented sales data, cost drivers, etc. in this section. If you can’t make sense ofrepparttar 112606 MD&A, that should set off alarm bells in your head. If you don’t findrepparttar 112607 information you need inrepparttar 112608 MD&A, you should…

4. Look atrepparttar 112609 Notes to Consolidated Financial Statements (Footnotes)

The footnotes tend to be more difficult to understand thanrepparttar 112610 MD&A, but you get really detailed information here. The footnotes are where management hidesrepparttar 112611 dirty laundry. And when you’ve got guys making today’s corporate salaries that laundry pile can get pretty big. Here’s where you’ll likely find what you couldn’t inrepparttar 112612 MD&A, it’s just that inrepparttar 112613 notes you may have to do some putting of two and two together.

Take your time sifting through this section, and try to identifyrepparttar 112614 income statement items that relate torepparttar 112615 footnotes you’re reading. You can do itrepparttar 112616 other way around, as well, and look forrepparttar 112617 footnotes that relate torepparttar 112618 income statement item.

If you still can’t figure out whatrepparttar 112619 company is doing, after going throughrepparttar 112620 MD&A andrepparttar 112621 footnotes, you may want to consider looking at another company. This one may be too complicated (or too devious) for your abilities. Don’t feel bad about not understandingrepparttar 112622 business, either. Evenrepparttar 112623 great Warren Buffett admits that he doesn’t understand some businesses, and he never lets his ego run away from him. If he can’t understand it, he won’t invest in it. I recommend you dorepparttar 112624 same thing.

5. Look at segmented data

I always like to look at segmented sales and profit figures to determine which product lines, or operating businesses, are growing sales faster thanrepparttar 112625 others. This information is usually inrepparttar 112626 MD&A. If you can, try to findrepparttar 112627 operating profit for each business segment as well. Then look atrepparttar 112628 profit margins for each segment ofrepparttar 112629 business.

You may be surprised atrepparttar 112630 different profitability levels of each business segment. Comparerepparttar 112631 segment withrepparttar 112632 fastest growing sales versusrepparttar 112633 segment withrepparttar 112634 highest operating profit. If these arerepparttar 112635 same segment, that’s good news. If they aren’t, that’s okay too.

You do want to watch out for companies that haverepparttar 112636 lowest operating profit in their fastest growing segment. This could cause a decline inrepparttar 112637 company’s overall profitability as sales grow faster than profits. For example, a segment that’s growing 5% a year, but has a 10% margin, will contribute more to total operating profit growth than a segment growing at 20% a year with a 1% margin.

I hope you find these tips helpful. Of course, there are plenty of other analysis tools that you can use to evaluate financial statements. It's important that you keep looking for more and better ways to analyze company data, because constant learning will make you a consistently better investor.

Chris Mallon is the editor and publisher of the Undervalued Weekly, a free personal finance and investment newsletter, published every Saturday.

To sign up for the Undervalued Weekly, send e-mail to underval@hot-response.com, or sign-up through the website at www.dynamicinvestors.net/index8.html.


97% Of American Homeowners Overpay Their Lender In Mortgage Interest Every Month.

Written by Craig Romero


Continued from page 1

Average Homeowner overpays $60,000

In fact,repparttar average homeowner in America is overpaying $2000 in mortgage interest every year, or $60,000 overrepparttar 112603 life ofrepparttar 112604 mortgage.

“That’s an enormous amount of money”. Says top mortgage analyst, Craig Romero. “This is money that homeowners are needlessly giving away each year. Imagine what a person could do with an extra $60,000.

While gaining back thousands of dollars from these overpayments is a huge benefit, it’s notrepparttar 112605 only one. Cutting up to 10 years fromrepparttar 112606 term of a traditional mortgage is also another major advantage.

“I’ve been usingrepparttar 112607 prepayment loophole for years”. Says Denver homeowner, Curtis Landau. “I’ve actually been able to remodel my home and pocket about $25,000…all fromrepparttar 112608 equity that was built so quickly.”

Americans must understand this prepayment loophole isn’t something lenders are eager to share with their customers. If they did, they would risk taking a huge cut in profits.

With over 50 million mortgages in force, it’s estimated Americans overpay their lenders in excess of $12 billion every year. It’s no wonder this loophole is kept secret…lenders are undoubtedly getting rich off these interest overpayments.

Written by Craig Romero To see how wellrepparttar 112609 prepayment loophole will work for you please enter his site at: http://www.wisemortgageinfo.com Craig Romero is an author and mortgage analyst dedicated to helping homeowners maximizerepparttar 112610 investment in their homes. ______________________________________________________

About Craig Romero:

To see how the well the prepayment loophole will work for you, please enter Craig's site at: www.wisemortgageinfo.com Craig Romero is an author and mortgage analyst dedicated to helping homeowners maximize the investment in their homes.


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