Personal Finance
Getting Started: The Income Statement
06/22/07 - 04:59 PM EDT
Another consideration is expectations. Analysts
and company management make predictions about a company's income in advance to help give investors an idea about the future. These predictions aren't always that accurate (and should be taken with a grain of salt) but how close they are to actual results can have a big effect on a company's stock price. If a company reports a quarterly profit greater than expectations (or even a net loss below expectations), stocks can see some big upward movement.
Like the balance sheet
, the income statement is an essential thing to look at in your fundamental analysis
of a company. How much money that company's bringing in is a big deal -- and stock prices reflect that. So a company's income statement can have a positive effect on your income as well.
To learn more about fundamental analysis, check out these lessons on TheStreet.com University:
- Getting Started: Fundamental Analysis
- Getting Started: The Balance Sheet
- The Finance Professor: Beginner's Guide to Earnings Calls
Don't analyze a company's fundamentals without it.
Learn how benchmarking can help you sharpen your fundamental analysis skills.
Digging deep into the fundamentals is key to unearthing investable companies.
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Armed with these questions, you'll get better answers than sell-side analysts do.
Some can't be figured out from the balance sheet.
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