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Discussing Investment Information

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Assume you are deciding whether or not to invest in a particular company. Discuss which elements of which financial statements you would want to carefully examine. Explain your rationale.

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Solution Summary

This solution explains the elements of the financial statements that should be examined when making investing related decisions.

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There are a few different areas I would definitely concentrate on for my decision. The first statement I would look at would be the income statement. I would immediately look at the operating income and the net income. It would be difficult justifying the decision to invest in a company that shows a net loss. Although there may be reasons to, like research and develop ways to prove profitability, it would not typically be a wise decision to purchase stock in a company that's failing or showing a net loss. On the income ...

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