maka wrote:Pesa Nane wrote:@Marty is doing a commendable job enlightening readers on
The Power of Financial Education thread.
Can the Wazua Financial Gurus give tips on interpreting the financial statements? Understanding Co. values? Screening out 'cooking' and exaggerated 'future outlooks' etc
FACT: Most people just read the
PAT and Dividend part.
...you must start from the basics what the different kinds of ststements are;what is found in them,how the figures there are derived...the CFA level 1 Schwarzer workbook on Financial Reporting and Analysis is really good and it starts from the basics...ukipata shida post swali hapa kuna wale wanoma...
I spent a better part of my late teen and early 20 educating myself, my thinking was, if I go to school and master my stuff, I will be able to stay ahead. I went to B-sch smash most of my classes studying finance and economic before I landed in a grad school to study more advance finance classes along side the CFA, by the time I got out of school I thought I was going to take over the world with my finance knowledge.
My expectation about real world careers have actually change alot after 7 yrs of working. First during my internship we were ask to create some DCF models which we did but non of us could explain anything about it apart from, positive cash flow or negative cash flow. When I graduated, I was hired by a financial institution's sales and trading team and I was ready to use all my financial knowledge to select the best securities, Wrong!
Honestly, spending time looking at or learning finance or looking at finacial statement is a waste of time. I remember when I was in sales and trading, there was this guy at J P morgan by the name John Rex, Mr Rex was the top analyst in healthcare field meaning all you have to do is watch what John say and you'll be good if you are trading healthcare stocks. Full stop. You can spend hours and hours going through the statemants but what Mr Rex said matter more than what you'll find in the statement, also, remember, every company somehow manage their earning one way or the other and you're not going to get anything material by looking at the statement because anything material will be annouced by the company.
Instead of wasting your time learning all the stuff in finance and financial statements, you'll be better served if you spend time learning the industry your are interested in. If you are interested in biotechnology industry or consumer goods or telecommunication, learn the industry dynamics and drivers and be an expert in it, you're not going to be the top analyst by reading the statements or calculation NPV and IRR, infact no one want you to be an expert in finacial statement unless your making a living as an auditor to be successful in investment or to build a good corporate career being an expert in soft skills which include understanding the dynamics of the industry you are in is very important.
Drunkard 10k Rollout.