F I SCAL FI TN ESS
MICHAEL J. DONNELLAN King Financial, Inc.
THE FUNDAMENTALS OF STOCK INVESTING This month I wanted to get back to the basics on a few of the important things investors should look for when analyzing a company’s stock. All publicly traded companies are required to disclose quarterly and annual reports, which give investors insight into a company’s operations. Here are the main items to look for when analyzing a company’s fundamentals… Revenues – The amount of money a company actually receives during a specific period. Examples of revenue accounts include: Sales, Service Revenues, Fees Earned, Interest Revenue and Interest Income. Gross Income – Total revenue minus the cost of goods sold. Costs of goods sold usually includes the material, labor and overhead that goes into producing the good or service.
Net Income – The profit remaining after selling expenses, taxes, interest expenses, etc., with the remainder being the profit or loss. You may hear this being referred to as the bottom line, because it is the last line of a company’s income statement. Earnings Per Share – The amount of net income divided by the number of common shares of stock of the company. A number that shows the profitability of each piece of the pie. Market Capitalization – The total value of a company that is traded on the stock market, calculated by multiplying the total number of shares by the current share price. continued on page 14
12 | Official Publication of The Ohio Landscape Association
