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The 4 Most Important Financial Metrics financial analysis of a company

by Langsongshipin123



Financial metrics are the key numbers that you can focus on in financial statements. There are three financial statements, the balance sheet, the income statement and the cash flow that we like to look at to find important metrics.

Were going to look at some of the most important financial metrics that you as investors can use to evaluate a company.

The first important number we look at on the balance sheet is liquidity. Can the company you’re looking at really cover everything that they need to cover in the next year? Or have they somehow overloaded themselves with short term debt and obligations that they could really run out of cash in the next year?

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In order to evaluate this, we want to look at the current ratio. Essentially it is a measure of working capital. It compares the current assets, which are assets that can be turned into cash in the next year, with current liabilities, which are obligations that have to be paid in the next year.

What you want to look for when evaluating a company is a 2:1 ratio of liquidity to debt. Some companies are very well run that have a lower ratios than that, because they are controlling their cash very well, or they are in an industry that isn’t growing fast so they don’t need as much liquidity.

These companies work their capital down so they don’t need as much cash on hand all the time and they can give that money to their shareholders. You will know that these companies are very well run because, they are really big companies.

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Most companies, particularly smaller companies need at least a 2:1 ratio between current assets and current liabilities. That’s a great measure of liquidity. We call that the liquidity metric.

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38 comments

Gilium 117 14/09/2021 - 8:27 PM

I love this guy so much!!! but omg those nails caught my eye

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Katiuska Vasquez 14/09/2021 - 8:27 PM

I loveeee how you explain. Loved your videos. Helped me a whole lot. Thanks, Phil!

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ACAYE GEORGE 14/09/2021 - 8:27 PM

well explained

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Lili Annisa Sitorus 14/09/2021 - 8:27 PM

thanks

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Coco Alegre 14/09/2021 - 8:27 PM

Where can i find these 3 financial statements? ( Balance sheet, income statement and cash flow ?

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Daniel Hunter 14/09/2021 - 8:27 PM

As someone who has done long term investing for years using fanancial statements, I must say this is the best video I've seen on how to learn this stuff, it's simple, short and effective. The other metrics I use as well is Return on Invested Capital (ROIC), and debt to equity ratio.

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Unknown Unknown 14/09/2021 - 8:27 PM

I plan on reading his book …Anybody read it yet ?

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Reinis Karolis 14/09/2021 - 8:27 PM

tnx!

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J English 14/09/2021 - 8:27 PM

Like the clean concise delivery- we would all be better off if people watched this than cat videos- who knew. I’m an analyst and what is presented here is real helpful for so many people who are investing without any guidance-very good videos

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Christian M. 14/09/2021 - 8:27 PM

Amazing. Thanks. What a great guy.

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Nazia Khan 14/09/2021 - 8:27 PM

I wish you were my professor..

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Maloha 14/09/2021 - 8:27 PM

This video could benefit from some text and visuals

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Alex 14/09/2021 - 8:27 PM

Could you recommend me some books about financial statement analysisis?

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Pavel 14/09/2021 - 8:27 PM

Thank you very much!

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Mohammad Pourheydarian 14/09/2021 - 8:27 PM

nice that operating cash flow is separated from other cash flows but surprise that rate of return on assets is taken at the same level of rate of return on equity.

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Ly Kimgech 14/09/2021 - 8:27 PM

Thank you so much

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Justin Truax 14/09/2021 - 8:27 PM

Liquid gold. Thank you!

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Farhienza Haikal 14/09/2021 - 8:27 PM

thanks for the video, it's help me a lot

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Big Bearn 14/09/2021 - 8:27 PM

When the freemason bankers have cash flow problems they simply ask the government to bail them out , inject money from the ripo market or make up financial instruments that no one understands which is is really a counterfeit scheme. What I look for is a time when the international bankers crash the economy and I try to mimick their diabolical scheme. They even crash great business just to buy more stocks at a basement price. Simply genius plan especially when you own the market and the system. Get a list of
bankers, investors and politicians who are freemasons and then buy a listening devise and have a professional spy put them in the highest degree of a lodge so you can listen to their financial bust and boom strategies. Let's be honest the trillionaires are bankers and they are in the inside of it all. They are never criminalize for insider trading because they own the system. These financial occultist can report all their 90 day trades all they want to the government and it won't matter because they are always ahead of the game and can it appear as though they are simply good investors. They won't push more that a certain percentage ,not to be obvious, but they know that they will be always ahead without being noticed and when a crisis occurs like the coronavirus , wow , they are like vultures ready to reap and steal from everyone and then blaiming it on a false flag or a blown swan design
Simply diabolical and Christ will only tolerate it and be mocked so much. A chastisement is warranted

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pmp96lau 14/09/2021 - 8:27 PM

Great presentation, this is really good stuff, Thanks Phil

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TheQsanity 14/09/2021 - 8:27 PM

Phil seems like a good guy. Nice Presentation. -Thanks

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Vishnu Balraj 14/09/2021 - 8:27 PM

Excellent video

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Life Goes On 14/09/2021 - 8:27 PM

Thank you!

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Ahmad Rusyaidi 14/09/2021 - 8:27 PM

What is the different between operating cash flow and net profit.. because u saya operating cash flow is how money the company make right?

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Stefan Hansen 14/09/2021 - 8:27 PM

Hello there, good information you provide us, thankyou for that. Would it be posible to download some statement and go through them , so we can see?

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Chase Ramos 14/09/2021 - 8:27 PM

thank you so much

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ridiska 14/09/2021 - 8:27 PM

Best joke from my country – Latvia.
Our bank offer 0.03% per year, so 1% is huge 😅

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Dr. Wezi Sunkutu MD 14/09/2021 - 8:27 PM

Awesome stuff there. I am learning. Thank you Phil .

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Mari Rada 14/09/2021 - 8:27 PM

Can you do a video of 30 companies that return at least 30 per year? Would be so helpful!

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Gabriel Sousa 14/09/2021 - 8:27 PM

Simple and straightforward! Great video

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Kashmira Brahmane 14/09/2021 - 8:27 PM

Thank you so much sir. I have not seen such an exhaustive explanation ever.

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Roky Erickson rocks 14/09/2021 - 8:27 PM

“Except we don’t want to see 1% we want to see thirty and a great company can do that”
(5:38)

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甜甜周 14/09/2021 - 8:27 PM

Thank you for sharing, it is very enlightful.

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Hafiz Qari Mudassar Hussain Hussain 14/09/2021 - 8:27 PM

Thank you very much sir, really valuable information.

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CookiMan 14/09/2021 - 8:27 PM

visual example would have been great

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Luther Nicholaus 14/09/2021 - 8:27 PM

finally found a guy who speaks my language

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Wong Wei Han 14/09/2021 - 8:28 PM

Bryan Cranston can really do finance stuffs

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