Financial Course Blog

If you are a stock market investor then you should know about indices and financial ratios,if not, still they're a good read and a good thing to know especially financial ratios and especially if you have a company. Some say if you are a prudent stock market investor, then you will not invest in a stock without understanding it's company financials. I'd say if you don't understand the company's financials then you shouldn't invest in stock market.

It's so important to know what a balance sheet is, and a cash flow statement or a profit & loss account that many investors base their investment decisions only on these statements. They do not bother to calculate the financial ratios, but I believe that is a mistake because financial ratios can indicate business trends and profitability. Also it's very useful to compare these financial ratios with the industry's standards to give some pretty good predicaments about where the company is going, to success or to bankruptcy.

The bottom line is that you need to work out financial ratios before you invest in a stock. For that you will find on this site, starting this week, some articles about financial ratios with short easy to grasp descriptions about how they can be calculated if they're missing and what purpose they can serve.

One very good external source for reading about financial ratios is wikipedia and you can find the page here:

http://en.wikipedia.org/wiki/Financial_ratio

or you can find an index of financial ratios here:

http://en.wikipedia.org/wiki/Category:Financial_ratios

Good Luck!