Over a Brew with Dylan Zhang: Full Company Financials

In his day-to-day, Dylan works to analyse trends in the market and translate them into insights. With an analytical mindset by nature, Dylan identifies as a diligent investor with a focus on medium to long-term investments. He employs a thorough approach that involves gaining a deep understanding of a company's financials and business model before investing any capital into it. Which is why Full Financials on Stake Black is such a vital feature for him.

Dylan tells us more about that while holding a glass of iced long black – his favourite even during the cold months. Grab your cup of Opening Bell and have a read.

What exactly are Full Financials? 

Full Financials refer to a comprehensive set of financial statements that you can access when you’re a Stake Black Wall St member. They include the income statement, balance sheet, and cash flow statement of any given U.S. stock for the last eight quarters, which together provide a detailed picture of a company's financial performance and position. Publicly-listed companies in the U.S. are required to release financials quarterly to provide investors transparency. You might be familiar with the term “earnings season” – this is the time companies release the figures to the public. At the end of the financial year, companies compile these financial statements and release a full annual report. 

Can you explain the difference between the income statement, balance sheet and cash flow statement?

The income statement, also known as the profit and loss (P&L) statement, summarises a company's revenue and expenses over a specific period of time. The balance sheet provides a snapshot of a company's financial position at a specific point in time, including its assets, liabilities and equity. The cash flow statement shows how a company generates and uses cash over a given period.

Why is this info important and how can it shape your decisions?

Diving into company financials helps me understand whether a company is doing well enough for me to be comfortable investing in it. Earnings reports and financial statements can also help identify trends and opportunities within an industry: analysing trends in the figures can help investors capitalise on emerging opportunities. Additionally, this info helps to manage risk. Companies are legally required to disclose any material risks they are facing, including going concern risks. Reviewing these may help investors avoid companies with high levels of risk, which has the potential to prevent significant losses in their investment portfolios.

How can someone start getting their head around Full Financials?

Understanding a company's financials can be daunting at first, but there are steps you can take to break it all down. You may start by identifying key financial metrics within the income statement such as revenue, profit margin and net income, to help you evaluate the company's ability to generate profit. Looking into the balance sheet, you can see how much assets it holds compared to its liabilities. With the cash flow statement, you could observe whether a company makes cash through its operations or if it simply takes on debt or raises more capital. Analyse trends in the statements over several periods to identify changes in the company's financial health and performance. You may even compare the company's numbers to its industry peers to determine its relative strength. Fortunately, Stake Black’s Full Financials breaks this information down with simplicity, making the task much easier.

Can you think of a time when financial data was useful for your trading?

As an analyst, financial statements are the first thing I look at – so I’d actually say it’s essential information I can’t invest without. A specific example of how it has helped me was in 2021, when global markets had their post-Covid rallies. With investors heavily focused on the technology sector, I felt the urge to join the bandwagon. Some companies I looked at were NVIDIA ($NVDA), Tesla ($TSLA), and Meta Platforms ($META). However, after looking through their financial statements, I could not fathom how their stock prices exploded – I thought that their performance didn’t exactly justify it. This made me choose to stay away from the technology sector and focus elsewhere. That was my personal decision. In hindsight, I truly appreciate coming to this conclusion, and it wouldn’t have been possible without taking the time to look into their financials.

Stake Black T&Cs apply.

The personal views in this article do not reflect the views of Stake and do not constitute financial advice.