What is the message about the revenue?
Investment behavior is based on predictions on future market behavior and individual stocks. These predictions are largely based on the previous company behavior. Those who have shown profits are likely to do this again. In the United States, the Commission for Stock Exchange requires a publicly traded company to submit documents called reports on earnings that indicate their profits and losses. Companies also publish reports that emphasize the numbers they consider are the most relevant to investors who are interested in society, and provide analysis.
Some investors have just read the press releases about earnings, but they contain little information. The alternative to read press releases is to move to the source: The actual revenue report document that the company files with the Securities Commission from which the earnings report is prepared. Each quarter must file a 10-Q form and must file a 10-K form per year. These submissions include stetement incomeAzy with the balance sheet of company and cash flows, along with the company's position analysis and identifying its vulnerability to market changes.
When analyzing the income report, investors should be careful to separate the company's own analysis from the numbers that includes. The report is important to the company because it shapes the expectations of investors about the future performance of the company. In order to encourage investment, the company seeks to give the numbers in the report as the most positive as possible; However, they are limited by the strict rules of the Securities Commission on accurate reporting. Investors should try to focus more on society numbers rather than on the rhetoric of the message.
Each earnings report has the same structure prescribed by the Securities Commission. Part I provides financial information and part II provides additional information, including legal information and analysis of the company's position in relation to the market. Investors should have inTo allow the information to be in Part I, especially the net income of the company compared to the previous performance, and the market risks that are vulnerable, which are shown in item 1a Part II.
It is important that investors have the exact impression of the company earnings so that they can make informed decisions on the suitability of the shares. Past profits increase the likelihood of future profits. The revenues are also helpful in determining the ratio of the price for earnings or the ratio of P/E. This is detected by dividing the market capitalization of the company or the total price of all its outstanding shares according to their annual income. Historically, the average ratio of P/E was about 15; Significant deviations from this number are traces for investors that shares are either undervalued or overvalued.