It is believed that good investments are identified with strong efforts in the form of ratio and performance analysis. Particular attention is paid to the trend in ratios derived from the quarterly earnings report over time. One of the most anticipated numbers is earnings per share, net income, net sales etc. A quarterly earnings report is a quarterly filing made by a public company to report its performance. It includes all three financial statements, including the balance sheet, income statement, and the cash flow statement.
If you are a shareholder invested in shares of some XYZ Company then you must know what’s happening in the company and how its shares are performing in the market. The quarterly earnings report is one way to find out. Though it is not easy to understand all numbers like an expert would do quarterly earnings report are made in a way that a layman can go beyond and gauge the overall performance of the company in recent and next few quarters.
Key Things to Look in Company’s Quarterly Reports
It is an important insight for investors that investors should always remember to gauge the company’s performance to keep tabs on their investment performance. Here, we’ve enlisted some key things (or numbers) that you should look in the company’s quarterly reports.
EPS is one measure of much importance to investors as it indicates the profitability of the company which calculated by the company’s net income with its total number of outstanding shares. The very first thing an investor should do is to read the company’s quarterly revenue and adjusted EPS. After that, determine whether or not the sales and EPS meet, exceed, or miss the agreed estimates of analysts covering the company.
Gross sales refer to the top line or revenue of the company. A consistent increase in gross sales shows the strength in business. While you’re at it, don’t forget to check the quantitative and qualitative improvement over time. Make sure, the growth numbers do not come from the selling of fixed assets. It can be identified in the balance sheet where the fixed asset will show a decreasing pattern.
Net sales can be derived from the gross sales by deducting sales return, sales allowances, and sales discount from gross sales.
The main goal of a company is to generate revenue. To fulfil that goal, the company pay expenses in the course of running the business refer to as operating expenses. It consists of items such as salaries paid to employees, legal & accountant fees, research & development fees, bank charges, electricity bills, and business license fees.
For investors, the operating expenses are exclusively important as they help in understanding a company’s cost and management efficiency. It helps investors in understanding the needs and costs that a company needs to generate revenue.
Net Profit or Net Income
In the income statement, an investor can find the details on loan and tax repayment which deducted from the operating profits will give you the net profit. It is also known by ‘bottom line’ which shows the company’s net earnings or losses in the respective quarter.
It is an important measure for an investor to look out for. It helps investors ensure whether the company is performing well or not, giving him the hint on the following performance of the shares he owned.
Note: – All information provided in this article is for educational purpose only. Views and opinions do not constitute any professional advice or recommendation.