Articles

Company valuation is the process of determining the appropriate price - or "fair value" - of a company's stock, as opposed to the "market price" at which it is currently trading on the stock exchange. For a DGI investor, valuation serves as an investment safety net. As Warren Buffett says: "Price is what you pay; value is what you get." We look for excellent companies trading below their true value in order to create a "margin of safety" (a highly recommended book). Reading F

Financial ratios are mathematical metrics derived by combining data from the three financial statements previously reviewed (balance sheet, income statement, and cash flow statement). These ratios enable "apples-to-apples" comparisons - such as evaluating a large company against a small one or comparing a company to its industry average. Without financial ratios, a figure like "a profit of one billion dollars" is meaningless unless one knows the amount of capital invested to

This is the report where "Cash is King." While an income statement may include accounting estimates and "paper profits," the cash flow statement shows exactly how many dollars entered and left the coffers during the period. For a DGI investor, this is the most important report to master when learning to read financial statements. After all, dividends are paid in cash, not in "accounting profit." Table of Contents: Working capital Cash flow from operating activities Cash flow