Financial statement analysis and security valuation

Abstract

This book shows how to handle the accounting in financial statements and use the financial statements as a lens to view a business and assess the value it generates. A new chapter, Chapter 7, applies the valuation models of Chapters 5 and 6 as tools for active investing. The process is refined in Part Three of the book after the financial statement analysis of Part Two, for it is this financial statement analysis that elicits the information to evaluate whether market prices are reasonable.