[Revised on 12/17/2013]

Click on this link, SmallTradesFinancialAnalyzer, to download a spreadsheet program for analyzing the financial status of a company.

The skeptical investor makes a financial analysis to confirm the advice of well-meaning tipsters, decisions of investment clubs, results of stock screens, or other sources that point to ‘good’ investments. Unless you’re proficient at reading financial statements without assistance, consider using the spreadsheet program to organize financial data for a systematic review. The process takes about an hour if you can download the latest set of annual and quarterly financial statements from the internet. I download the statements from my brokerage account at Schwab.com (1). I assume, without knowing for sure, that other brokerage firms provide the same data. If not, the data can be extracted from SEC filing forms 10-K (annual report) and 10-Q (quarterly report). At this time (December 2013), the Yahoo Finance (2) website provides historical prices.

The analysis program is used in Microsoft’s Excel worksheet platform. There are 11 pages that provide for data storage, entry, and analysis. You begin by downloading financial data onto 7 blank pages labeled Aincome, Abalance, Acash, Qincome, Qbalance, Qcash, and 6Y historical prices [e.g., Aincome signifies the annual income statement, Qbalance signifies the quarterly cash flow statement, and 6Y historical prices is reserved for the date and closing price of the stock]. After downloading the data, copy and paste selected information into blank white spaces of the data entries page. The data entries page is organized from top to bottom into annual statements, quarterly statements, and historical prices. Cells with a red triangle in the corner contain hidden comments that appear when passing the cursor over the cell. The blue-font reminders disappear when data are entered in the appropriate cells. Enter 6 years of historical prices.

The program computes and displays information in the form of charts and tables located in the pages for financial charts and market valuation. The financial charts page is organized into charts on the left hand side and legends on the right hand side. At the top of each chart is a title that contains either an error message or the title of the chart. The error message warns that incomplete information may be corrupting the charted data, in which case you should review the data entries page for missing or incorrect data. The legends contain questions and explanations; the questions are relevant to what most investors want to know about the company’s operations and financial success (3-7). The market valuation page is organized in the same way; charts on the left and script on the right. The top of the page has a link to industry stats published by Yahoo Finance (2). Industry stats are useful for placing the company’s market valuation into a broader perspective. The last page, notes, provides a general explanation of financial statements based on author Thomas Ittelson (3).

The financial analysis program is only useful if you can easily locate and enter the required information; even so, it takes about 15-60 minutes depending on your familiarity with the process.  The charts and tables illustrate the company’s profitability, business model, growth strategy, management efficiency, ownership, and market valuation.

If the program inspires your investing to support the betterment of society, consider making a tax-deductible contribution to your favorite charity or my favorite charity.

Copyright © 2013 Douglas R. Knight


1. Schwab.com. Charles Schwab, https://www.schwab.com/, © 2013 Charles Schwab & Co., Inc.
2. Yahoo Finance, http://finance.yahoo.com/ .
3. Thomas R. Ittelson. Financial Statements, A Step-by-Step Guide to Understanding and Creating Financial Reports. Career Press, Franklin Lakes, 1998.
4. Leita A. Hart, Accounting Demystified. McGraw-Hill, Chicago, 2006.
5. John A. Tracy, How to Read a Financial Report, 6th Ed. Wiley, 2004.
6. Christopher H. Browne, Forward by Roger Lowenstein. The Little Book of Value Investing, John Wiley & Sons, Inc., Hoboken, 2007.
7. Joel Greenblatt.  The Little Book that Still Beats the Market.  John Wiley & Sons, Inc. 2010.


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