Stock Fundamental Analysis — Reading Financial Statements
Fundamental analysis asks what a company is actually worth. A plain-English tour of the three financial statements and the numbers that matter most.
What fundamental analysis is
Unlike technical analysis (which reads the chart), fundamental analysis asks how much money a company actually makes: Is it profitable? Is profit growing or shrinking? How much debt does it carry? Is the share price reasonable? The answers live in the financial statements.
The three statements
1. Balance sheet — what the company owns and owes.
- Assets: cash, equipment, inventory, receivables
- Liabilities: bank debt, payables
- Equity: share capital plus retained earnings
The identity is Assets = Liabilities + Equity.
2. Income statement — what it earned and spent.
- Revenue (sales)
- Cost of goods sold
- Gross profit = revenue − COGS
- Operating expenses (salaries, rent)
- Net income — the bottom line
3. Cash flow statement — the real cash in and out. A company can look profitable on paper while little cash actually arrives; a persistent gap between profit and cash flow is a warning.
Numbers worth watching
- Net income — rising is good.
- Revenue — rising is good.
- Debt — lower is generally safer.
- Free cash flow — positive and growing is healthy.
Common mistakes
- Reading profit but ignoring cash. Big reported profit with thin cash is a danger sign.
- Not comparing year over year. 50B of profit is good news or bad depending on whether last year was 30B or 100B.
- Ignoring debt. Too much leverage can threaten the whole business.
Company filings are public — for Vietnamese stocks you can find them on data portals like VietStock or your broker. fastbot lets you track your stock positions and set price alerts across DNSE and eToro. Learn more.