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Thursday, 16 March 2017

You Know Company's Balance Sheet In Its Simplest Form???


"Less Analyzing. More Investing!" - Createwealth8888

"To make money from the stock market, it is not how well you analyze it. It is how well you invest into it." - Createwealth8888



Company's Balance Sheet?

How many retail understand how a company grows its balance sheet in a simple layman understanding without an accounting background?

Uncle8888 has asked a few retail to think about it. This is the minimum level that retail must fully understand balance sheet in its simplest form; otherwise; how you analyze arh?

Surprisingly; even a few seasonal retail couldn't explain balance sheet in its simplest form; and they think they understand financial statement well to know the company's  future and business.

OK. Enough of poke!

Sorry. sorry. sorry!




16 comments:

  1. CW,

    I also kind of dun understand your question... Maybe a bit more specfic?

    Simplest form is not a universal understood concept you know?

    ReplyDelete
    Replies
    1. Sillyinvestor,

      Simplest form meant exactly what it is - stripped down to the basics.


      Your problem is you think too much!

      What universally understood concept? We are not talking about XIRR here ;)


      LP has just given you the explanation of what a balance sheet is in simple layman language :)


      Of course I know why you asked.

      You must be thinking cannot be so simple. There must be a trick question somewhere ;)





      Delete
    2. Hi SMOL and CW,

      I mean no offense. If construe that way, I apologize.

      I just happen to ask what comes to my mind.

      SMol,

      U are half right. I am egolistic, but did not think too much, had I think a bit more, I would not have reply.

      I really thought huh? What simplest is there is balance sheet? Balance?

      Delete
    3. Had I not been egolistic, the question would have been phrased differently.

      So my bad.

      So it's important to have either, to save the embrassement I face now. Either think deeper to find the answer myself or humble to phrase the qn properly.

      Lol

      Delete
    4. Sillyinvestor,

      I ended my sentences with lots of :) and ;)

      I'm playing with you.


      The hardest past to explain Balance Sheet to non-accountants is WHY must Asset and Liabilities be "balanced" on the Balance Sheet???

      LOL!

      And yes, I'm teasing you again ;)


      Just as long you can make 30-40% for your position trades (hold 4 months sell; hold 12 months sell) who cares right?

      Yes, its a rare compliment to your Venture and YZJ profitable trades. Buy the dip works! (Until it doesn't)

      Seems like B, LP, and you like this style ;)

      Delete
    5. Smol,

      U dun know, recently I seem to ruffles a lot of feathers when I ask questions. Not sure if it's my tone and I had ask questions that they can't answer.

      U know me, I egolistic but not arrogant, dun know why people get defensive

      Delete
    6. Sillyinvestor,

      Ah! That's an art too! How to ask questions ;)


      Its a big topic. You should know as its part of pedagogy as in the Socratic Method.

      I'll just drop a few keywords and that my help:


      1) Culture. You don't phrase the same question to a senior like you'll be asking a junior.

      2) Power structure. You asking as a HOD, trainee, customer, buyer matters.

      3) Context. You clowning around, trying to make the other person lose face, or genuinely don't know ask? Only you know.



      You have already half-answered your question: "I had ask questions that they can't answer".

      Try asking more such questions to your principal see whether you'll get your pay increment end of the year!

      LOL!


      P.S. It's part of EQ. Trust by verify once can already. Don't keep verifying over and over once you got the answer ;)

      Delete
  2. Try this.

    Is this simple enough?

    www.elearnuk.co.uk/uploads/courses/223.pdf

    It seems most of us is more interested in Net Income & Net Cash Flow and just look at Balance sheet.

    ReplyDelete
  3. Hi bro8888,

    Balance sheet, in simplest terms, is just a sheet of paper detailing how much you have (assets) and how much you owe (liabilities) and how much is remaining (equities), at a particular point in time.

    ReplyDelete
    Replies
    1. Agree! but I guess CW version is if the remaining (equity) is generating cash flow or not? If not, then jiat lat.

      Delete
    2. But some like Star Hub is highly depending on DEBT then Equity.

      So ROE is sucks.

      Balance Sheet alone can't tell the whole picture.

      Neither Income statement or even cash flow alone.

      Delete
    3. Another words, DEBT(Liabilty)can generate cash flow too.

      Delete
    4. So we call this "good debt"? lol...

      Delete
    5. Yes lol.......

      But company like Star Hub making use of a lot of debt as capital to operate i find it hard to "understand".

      Delete
  4. CW,

    I think a bigger problem than poor financial literacy is poor reading skills ;)

    The main thrust of your post is the QUESTION you've asked:

    "How many retail understand how a company GROWS its balance sheet in a simple layman understanding without an accounting background?"



    Guess what?

    "Seasoned retail investors" care more about proving you wrong that they know HOW to DEFINE what a balance sheet is.

    Talk about big egos...

    LOL!


    Next time write with crayons.



    Those who can't "read" should stay away from fundamental analysis and stick with pictures and cartoons as in technical analysis ;)


    ReplyDelete
    Replies
    1. Topics or ideas for BigScribe to pick up for next talk session. LOL!

      Delete

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