Stock Market Investing: Fundamental Analysis and Financial Statements | Learning District | Skillshare

Playback Speed


  • 0.5x
  • 1x (Normal)
  • 1.25x
  • 1.5x
  • 2x

Stock Market Investing: Fundamental Analysis and Financial Statements

teacher avatar Learning District, Invest in yourself

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

10 Lessons (3h 3m)
    • 1. Introduction

      0:50
    • 2. What, Why, and How

      3:36
    • 3. Yahoo Finance Platform

      9:12
    • 4. Company Overview

      3:06
    • 5. Income Statement

      29:32
    • 6. Balance Sheet

      21:46
    • 7. Cash Flow

      49:04
    • 8. Terminology and Calculations

      44:11
    • 9. Investor Relations

      19:45
    • 10. Final Words

      1:28
  • --
  • Beginner level
  • Intermediate level
  • Advanced level
  • All levels
  • Beg/Int level
  • Int/Adv level

Community Generated

The level is determined by a majority opinion of students who have reviewed this class. The teacher's recommendation is shown until at least 5 student responses are collected.

216

Students

--

Projects

About This Class

In this course, you will learn how to analyze financial statements and reports for any company or corporation using fundamental analysis. We start by going through the income statement, then the balance sheet, and lastly the cash flow statement. I will show you which platforms you can use and where to get these statements and reports from. Also, Through out the course I will teach you the definitions and what trends to look out for. In Addition, we will perform some calculations and cover some important terminologies. The skills learned in this course will help you determine whether a company has a good financial health and if it is a good investment. This course is all about financial education.

Meet Your Teacher

Teacher Profile Image

Learning District

Invest in yourself

Teacher

Class Ratings

Expectations Met?
  • Exceeded!
    0%
  • Yes
    0%
  • Somewhat
    0%
  • Not really
    0%
Reviews Archive

In October 2018, we updated our review system to improve the way we collect feedback. Below are the reviews written before that update.

Why Join Skillshare?

Take award-winning Skillshare Original Classes

Each class has short lessons, hands-on projects

Your membership supports Skillshare teachers

Learn From Anywhere

Take classes on the go with the Skillshare app. Stream or download to watch on the plane, the subway, or wherever you learn best.

Transcripts

1. Introduction: Hi, welcome to the course and thanks we're enrolling. 2. What, Why, and How: So what is fundamental analysis? Fundamental analysis is determining a company's financial conditions and health by analyzing their financial statements. And why do we want to use fundamental analysis? Well, fundamental analysis will help you decide if the stock is worth investing in. By understanding the upsides and downsides of the company, it helps you understand the company's roadmap and future growth. So for example, you can see how much of the revenue is being reinvested back into the business to help it grow. Or if the company is doing really well financially. You can see that whether the company is actually in using some of that revenue and profit to buy back shares to actually decrease dilution amongst shareholders. It also helps you understand the risks. So for example, in the financial statements, you can see that whether the company has short-term and long-term debts. And also you can see the amount for those debts. And you can also see the cash that the company is sitting it. And you can do the calculation to determine how long it will take the company to pay back those short-term and long-term debts using the cash they have at hand. When performing fundamental analysis, there are several statements you can take a look at. One of them is called the income statement. Income statement shows you things such as revenue, cost of revenue, income and lost. Their next statement or report we can look at is called the balance sheet. Balance sheet includes things such as assets, both short-term and long-term, and also the company's liabilities, both short-term and long-term. Then next report we're going to look at is called cashflow. By going through the cashflow statement, you can figure out how much cash a company has at hand. Cashflow also shows you the breakdown of how that cache is being spent. You can perform fundamental and financial analysis on a publicly traded company on two different timeframes, quarterly and annually. All publicly traded companies are obligated to file their financial reports with the US Securities and Exchange Commission, also known as SEC, every year and every quarter. Now on top of the three reports we mentioned earlier, there are other reports you can use to perform your fundamental and financial analysis. One has, one of those reports are called, is called the ten K, which is the annual financial report. And the other one is called ten q, which is the quarterly financial report. These reports will provide a lot more detail compared to somebody free tools or platforms we're going to see in this course. And I'll show you where you can actually download these reports for each company. Some of the tools that are available for free to you that you can use to in order to get those financial reports are Yahoo finance companies website. So each company should have a website, and each website should have a section called investors relation. And if you navigate to the inverse investors relations section on their company's website, you should be able to see a lot of reports such as ten K, ten K and other consolidated financial reports. Also, your investment broker might have access to these or provide access to these reports. So you can simply log in, search for your company and see if they have a financial section. You can also look at the Securities and Exchange Commission or SEC website. It's simply FCC.gov. And you can see all the filings for a specific company on there. 3. Yahoo Finance Platform: In this lecture, I'm going to walk you through the free tool we're going to use in order to analyze financial statements or get access to the numbers. And it's called Yahoo Finance. So if you go in Google and search for Yahoo Finance, it'll be the first 1, first result here. So go ahead and click the link. And when you navigate to the Yahoo Finance webpage, this is the front page. So this is why you'll see when you first navigate to it. So there's a bunch of summary things here like SMP 500, how it performed for the day, how dao is doing different other things like cryptocurrency, crude oil and such. And also you can see that there's a lot of information provided on the front page, so a lot of news. And as you can see, there's a little bit of table on the right-hand side here, which gives you a lot of summary on a lot of different sectors. So when you first come into the Yahoo Finance page, this tool is free, so I highly recommend you use this, especially to start with. And this will give you all the information you need to go through the financial statements. And when you come to the page here, you have your search box. So go ahead and click on it. So one thing you can do is you can either search for the company by name or if you know the ticker symbol off the top of your head, you can also put that in. So for example, I'm going to search for apples. So if you just type in Apple, so I'm putting the company's name, but you can see that it's providing me with some results. And the ticker symbol for the apple is AAPL. So you can go ahead and click that. And then they'll take you to this page. So this page here is the summary page of Apple and all the information you need to analyze the company. So just to give you a quick overview here to start with, so you have the company's name, you have the company's ticker symbol. You have the closing price of the day. So this is as of July ten, and you can see that the stock price closed at this amount, so $383.68. You can see that compared to previous day's close, how much it went up in terms of dollar amount or in terms of percentage amount. Now if you scroll down a little bit, it does. This is a very quick summary view of the, what the stock is doing or what the price is doing recently. So previous close, so this was this was today's close. This previous clause would be yesterday's close. Here. This number, the open is the opening price of today's. So today the stock open at $381.34, but it closed at $383.68. So this is the opening price of the day. Here you can see the days range. So for this day or for today, the stock actually went as low as $378 and as high as $383. So it just shows you the movement of the price action for the date. Here you've got the 52-week range. So this will tell you the lowest point and the highest point within the last 52 weeks or a year. Here you have the volume, so you got two volumes here. You got volume and average volume. So volume is the volume of the day. So this will tell you how many shares were traded for the day. So for today, 21.8 million shares were traded. Average volume is the volume, the last average of last 30 trading days. So the last, on an average, over the last 30 days, 35 million shares were traded. Here you have the market gap. And market gaps is represents the, you can think of it as d, overall value of the company in the stock market. So Apple is approximately worth 1.66 trillion at the moment. And you have some other information here like the price to earnings ratio currently at 30 EPS or earnings per share at 12.73, you got the earnings date. So this would be the quarterly date where the company will announce their earnings. And here if the company pays dividend, which Apple does, it'll show you the annual dividends. So this is the dollar amount dividend that's going to be paid per share to shareholders. And this is the equivalent percentage. And here you've got the one-year estimated price target. And on the right-hand side here you got the very small chart and just a very quick summary. There's some preset timeframes here. So by default it's loading on one day. So this was sort of like the price action of the day. So if you wanna look how the day did. So it started around if you move your cursor on the top beginning here. So it started around $382, went down to almost about 379. And then from that point on, it's slowly went up and then it closed at $383.68 for the day. Now you can change these presets. So this is for the five-day, this is for one month. So as you can see, the trend here for the one month is slowly going upward. So this is a nice upward trend over the last month. And you can also look at 1-year, five-year and the max. So this is a quick chart here if he just kinda want to quickly see what's happening without any noise. But if you want to see a more detailed chart where you can do is you can actually come here or on top of here, you can click the chart tab. This will take you to the interactive chart with that has a lot more options. So here you can see that you've got your line graph here. You've got your volume, and then you got your time horizon on the bottom, and the y-axis is going to be the price. So there's lots of things you can do here. You can change, you can draw lines. You can use the draw function to draw a trend lines. If you perform in technical analysis, you can change the line format to area, which is sort of like the area chart here. And then you've got candle and so on. And you can change the time intervals. We got one minute-to-minute, five minute, 15 minute, all the way to one year. And then here you can look at some predefined time horizons here. We can also put in some technical indicators if that's what you want to do, or if you perform in the technical analysis with price action. This, there's also this neat feature. You can compare this to other ticker symbols as well. So if you ever want to compare one company a to company B or Company a to an index. You can do that through this feature. So for example, we can just go ahead and click this comparison. So here's some quick ones. If you want to compare Apple to how the overall US S and P 500 Index is comparing, comparison and performing. So you can go ahead and just click that. It'll ask you what color you want the line to be. Since our apple line was already blue, I'll just changes to orange. So it's more visible. And now you can see that you'll, you'll have these side-by-side comparisons. So as you can see, the blue line is apple, and the orange one is the SMP 500. So clearly right off the bat, you can see that Apple is performing much better up to this point or year-to-date compared to S and P 500. So since this course is not really about technical analysis, we won't be investing a lot of time going through charts. So I'm just going to reset this back. And again, going to the top here you have a lot of tabs here which will provide you different sets of information that you can use to analyze a company and see how they're doing and decide whether it's a good investment or not. So because the conversations, because statistics, which provides a quick ratios, but you need to understand what those ratios mean. Got historical data, you got profiling of financials analysis, options, holders, and sustainability. So for this course, we're gonna be focusing on financials. So as you can see here, this will be this financial staff here will give you the three financial statements that will be covering throughout the course. The income statement which loads by default when you hit the financial step. Then we got the balance sheet and then we've got cash-flow. And one other thing I would like you to note is that there's two different timeframes for these financial statements and numbers. So there's annual and there's quarterly. So by default, when you click on the financial stab, it loads it by annual. And then if you'd like to see numbers for quarterly, you can go ahead and click quarterly and I'll show you the quarterly numbers for that company. 4. Company Overview: Alright, in this course, the company we are going to be using two as an example to perform our fundamental analysis and analyze the financial statements is called Intel. So let's go ahead and search for Intel. And as you can see, this is the first one is the right results. So Intel Corporation. And then if you click on INT, See that's the ticker symbol for it. So go ahead and click on that. And you can see here, this is the name of the corporation, Intel. This is the ticker symbol for an INT. See, this is the closing price of the day. And here you can see underneath the name, you can see that which stock exchange that company is trading on there. So in our case, it's the nasdaq stock exchange. Okay, some information about Intel. So Intel Corporation is a company at a semiconductor company that manufactures chips and processor units. So you might have heard things like i3, i5, I7, IE9 processors, which are processors that, or CPUs that are used in things like tablets or smartphones or laptops. They also make processors for cloud computing and data centers. And they're currently working on 5G processors. And in general there in the semiconductor industry and they build integrated chips. Thing to note about Intel Corporation is that they're actually pretty huge in the industry. So if you look at the market gap here, you can see that the company is worth about 252 billion, which is pretty big. And in order to compare that or see how big that is, you can also look at one of the competitors, which is called AMD or Advanced Micro Devices and go ahead and search for that. So amd also traits on the nasdaq stock exchange. But if you look at the market gap there worth only about 65 billion. So Intel is much bigger than AMD AND also manufacturers and builds processor units for things like laptops and computers and servers. But as you can see in simple comparison, you can see that Intel is much bigger than AMD. So it, amongst the semiconductor companies in this industry, there are pretty big and well-known. Also you can see that the company is doing well, so that they're actually paying dividend back to the shareholders. Dividends are just a form of interests that the company pays back in form of cash to the shareholders to reward them and thank them for investing in the company. So the last distribution was $1.32 and this is annually per, this is how much they give back for each share. So what you wanna do is because normally the companies distribute their dividend quarterly, there would be this number divided by four. So that's how much they would get per quarter. And here's the equivalent percentage of that dividend. 5. Income Statement: Okay, now that you know a little bit about Intel and what they do, let's go ahead and take a look at their fundamentals and analyze their financial statements. Now for this lecture will be covering the income statement and we'll be going through that. And as mentioned when you previously I, when you click on the financial step in Yahoo Finance by default Elodie income statements or we already on it. We don't have to do anything. And the default timeframe is annual. So if you want to be looking at annual number, you're fine. This is what you have in front of you if you want to change it to quarterly and look at more recent numbers, this is what you would do. So by default is set to annual. And as you can see that you can see the data for the past few years. So you can see 2016201720182019. Now, there is a column here called TTA, TTM, and that stands for trailing 12 month. So one thing to note is that these columns here, these four columns, 2016171819, all the information and numbers provided for these four columns are based on fiscal and year. And the column that says trailing 12 month, this is the numbers or presents the numbers for the past a consecutive months. So that's very important to understand. So depending on the way and these, this column here, the numbers will change once every quarter to readjust because it's not based on fiscal year, it's based on the past consecutive 12 months from the time you're actually looking at this column. So it's very important to understand that and to know that based on what you're looking for, what column you should be looking at. Ok, let's start going through the breakdown. So the first row here is called total revenue. Now, you can think of this revenue as just a pure revenue. So it's a raw number, it's pure revenue and it doesn't really take into account of any expenses that were required in order to make that revenue. So, for example, materials, employees, staff manufacturing cause marketing, advertising, sales, and any of that. So this just represents the entire, overall revenue, not including any of those costs. And one thing I like to mention is that when you're looking at these numbers, please pay attention. There's a little text year saying all numbers in thousands. So these numbers, whatever number you see here, you have to multiply by 1000, or you just add three zeros at the end. I guess they didn't wanna do that to save some real estate here on the screen. But keep the numbers more readable and short. But whatever you see here, don't forget to times that by 1000 if you see this text. Okay? So right now for example, in 2018, we're looking at the total revenue of 70.8 million. This is actually not million billion because we have to take 70 million and times it by 1000, which is 70 billion. So just a word of caution on that. Make sure if you see this text. Also in other brokers, not just yell finance anywhere you see that makes sure that you're actually doing that so that you understand the numbers correctly. So again, in this case, this is 62 billion in 20172018, this is 70 billion. Okay? So just a note on that. Now, the first thing we wanna do is looking at the total revenue. So again, we on annual timeframe. So you can see that in 2016, Intel made 59 billion. In 2017, they made 62 billion, or 62.7 billion. In 2018, they made 70 billion in 2019, then made approximately 72 billion. So right off the bat, you can see that this is a good trend. So because the company is increasing the revenue year over year, so 59 to 62 to 7272. So this is a healthy thing to see in a company. So this is a good sign. You do want to see the company continuously grow and continuously increase the revenue. Because more revenue means more profit. And more profit means the stock price. The shareholders, the stock price will appreciate over time if the company is healthy and just continuously innovating and bringing in more revenue. Okay, so the next line or the next row is called the cost of revenue. Now, costs of revenue, one way of thinking about this is that, for example, Intel makes processors and chips, right? So in order to make that chip or make that processor, you need materials and you have to buy those materials and you have to put them together in order to make those ships. So for example, in order to make a processor, you might need steel, you might need copper, you might need silicon, and you might need many different materials. And what you have to do is you actually have to purchase them and there's a cost associated with that. And you have to then put them together and manufacturer and before you can actually sell that and to different vendors for them to use the chips. So the cost of that material, you can think of that as being the cost of revenues. So how much did you have to spend to get those materials in order to create this much revenue. So you can think of costs of revenue like that. So in simple terms, in 2016 until had about, in order to get 59 billion, they had to spend about 23 billion. So this 23 billion, again look at the trends. So in 2016 it was 23 billion and in 2017 it's 23. So let's say in 2016 it was 23.2 billion and in 2017 he was 23.7 billion. So if you look at the revenue, this is actually a really good thing because if you look at the revenue, that revenue went up by approximately 3 billion. But the cost of revenue didn't go up that much. It only went from 23.2 billion to 23.7 billion. So it's not even, it's, it's even less than a half, a half a billion. It didn't go up by even a billion. So. You've got about 3 billion increase in revenue, but you didn't get that much increase in the cost of revenue. So this is actually a good healthy sign. This is what you want to see. And also like in 2018, you can see that from 20172018, the cost of revenue when approximately 62 to 70, so approximately 8 billion. But the cost of revenue went from 23 to 27, which is about 4 billion. So again, this is a good sign. There was a huge increase in 2018 in the revenue. But obviously the cost or revenue will be higher compared to previous years when you combine those two to these two. So again, their revenue went up by a lot, but the cost of revenue went up by about half of that. So this is something to keep an eye on and this is definitely healthy trend as you look. And what you don't want to see is, for example, revenue going up by 2 billion and cause the revenue also going up by 2 billion, or even worse, 3 billion, which puts you in the negative. So that's definitely a red flag and that's something you should definitely keep your eye out on. Okay, the next line here is called gross profit. So gross profit is profit that accompany In this case, Intel is going to make after subtracting the cost that is associated with making their product and selling their product. And that those costs are, you get gross profit by taking those costs and subtracting from the total revenue. So as you can see here, the way you would get gross profit is you would take this number here. So the total revenue and you subtracted from revenue, and that's what gives you the gross profit. So in Intel's gaze, for the past 12 months, the total revenue was 75 billion and the cost of that, the cost to make that 75 billion was 30 billion. So if you take 75 billion and subtracted by 30 billion, you get 45 billion. So this is exactly how you calculate gross profit. And again, just like revenue with gross profit because this is the profit that the company is going to make from selling their services and products. You want to see a healthy trend would be seeing an upward sort of continuation of increasing gross profits. So again, you can see like in 2016, thirty six, thirty six billion, thirty nine billion, forty three billion, four hundred forty two billion and so on. So seeing an increasing gross profit is definitely healthy and it also shows that your total revenue is always greater than your cost of revenue. Because if it costs you a lot more to actually make revenue, then your company is no longer profitable and you're going to be in the negative, which is a really bad sign for your business. So, yeah, this is what the definition of gross profit is and what you want to be looking at as an increasing, like from year to year or quarter to quarter, you want to be seeing an increasing gross profits for your company. Since we are talking about gross profit right now, I'd like to mention that you might have heard of a term called gross profit margin from other investors. Or reading on different articles. And it's very easy to calculate this just a percentage ratio that you can sort of calculate on your own that gives you some insight. And simply, it's very easy to calculate. All you have to do is you have to take the gross profit and divide it by total revenue. So let's go ahead and do that for Intel for the trailing 12 month, which is the recent data. So I'm going to get my calculator out here and I'm just gonna do rough numbers. So for the gross profit, it's 45 billion. So 45 billion divided by the total revenue, 75 billion. Again, very rough numbers online including any fractional digits in here. And if you go ahead and calculate that, and this is percentage, so you have to times it by a 100 and that's going to be 60%. So you can see that the gross profit margin for Intel is 60%. Now, what does this 60% mean? Technically, it doesn't really mean anything unless you compared with something right? Now, in general, a rule of thumb is this. The higher this number the better because when you're dividing your gross profit divided by total revenue, the result of that division will be higher if the number on top or this gross profit is bigger. And if this number is bigger, it means your company is making a lot of profit. The higher the number, the better. In our case is 60%, which in my opinion is pretty nice and pretty high. But then again, you'd have to compare this number to other competitors or other companies within the same sector. So let's go ahead and quickly do that. So for Intel, we calculated this to be 60% for the gross profit margin. Let's quickly go to AMD, which is one of Intel's competitors in the same sector. And we can do the same thing. So for the trailing 12 month, let's take day made a total revenue of 7 billion and their gross profit was 3 billion. So let's go ahead and divide 3 billion divided by seven. And you can see that the result is 42. So let's go ahead and times that by a 100. So it's 42%. So Intel was 60 and AMD is 42. Not that 42 is a bad number, but Intel is. They have a much higher, 20% higher gross profit margin, which is great. Okay, let's go ahead and head back to intos financials. Again. Now we're back to the income statement. So the next thing we want to be looking at is called operating expenses. And in Yahoo Finance, operating expenses is a section. This section could consist of one or more things depending on the company you're looking at. And by default this is expanded, which is nice so you can see the breakdown or you can just go ahead and collapse it if you don't want to be looking at it. So what are our operating expenses? Operating expenses is that cost that a company has to pay for its everyday business operations to run. So for example, payroll and paying the employees and the staff of the company. Equipment, inventory, marketing, advertising, renting, and leasing. These all fall below the category of operating expenses, or sometimes allocating a budget or a portion of the budget to research and development if the company is trying to produce the next generation products. So in Intel's case, for example, they're selling their current version of the chips are processors and CPUs, but at the same time they have to be working on the next generation or next version of their chipset or the new technology. So research and development, or sometimes you might hear, R and D also falls in this category. And the budget that's going to be allocated for that. So those all fall below the umbrella for operating expenses. So looking at Intel, again, as I mentioned, depending on what company you are looking at, you might see different things under operating expenses. But the important thing is Yahoo Finance will show you the total, and we'll talk about that in a second. But in Intel's case, we have two things in here. We have research and development, and we have selling, general and administrative. So research and development. So as I mentioned, this is a budget that's going to be allocated for the company to work on things like, such as innovation and next version of their technology or next version of their product. You need a budget allocated for people to research and develop that new cheap chips that are that new product. So That's what this money or this 13 billion. We again, we are looking at the 12th trailing month here. We're looking at that for Intel. And as you can see, since 2016, the same amount of budget has sort of been allocated. So we went from 12.71313.5 billion to 13.3 billion. And it seems like the number is always there. So it seems like the number is steady and entails always investing around the same number every year for their research and development. Which is actually a good thing because it shows that they're constantly working on the next-generation product. So that's one of the operating expenses that are displayed here for Intel. The next thing is called the selling general and administrative, sometimes short for SG and a. So the way you can think about this cost is the cost of marketing and paying your employees so that salaries and all the money you have to pay the staff. So that falls under SG&A. So and then the last row here is called total operating expense. And normally it would just be the sum of every individual thing that would add up to the total operating expense. So in this case, that things do add up. So. You take 13 billion from research and development and you add the 6 billion from the employee's payroll and salaries, you get 19 billion. So in this case the numbers add up. There will be cases where this number might not add up. So for Intel it does. But for example, one thing you can imagine is that let's say this was 13 billion, this is 6 billion. But all the sudden in the total operating expense, you see instead of 19, you see 25 billion. So about 6 billion of stuff is not presented here. So Yahoo Finance will always show you the overall or the total. So you can trust that this number is correct in terms of total, but they might not be showing some of that breakdown. And if you want to see that, you would actually go have to go to the company's website and get or download the full income statement, sometimes also called consolidated financial statement from their website. And I'll be showing you how to do that later in this course. But the important thing here is that just trust that this number in Yahoo Finance for total is correct. And another thing I want you to note is the trend here. So looking at different years for historical data, you can see that the operating, the total operating expenses for Intel is actually going down, which is really good signs. So because total operating expense, as I mentioned, is something that the company has to pay. And when you pay that cause is actually eating into your revenue, your net revenue or your net income as a company. So the lower these expenses, the better for the company, which means they can take more of the profit. So you can see in 2016 it was about twenty one billion. Twenty one point four billion. Then in 2017 we went down from 21 to 20.7. Then we went down from 20.7 to 20.4 or five. And then from 20.5 we went down to 19.7. So this is actually showing a decrease in expense, which is actually really good. So this is again, a very healthy signed for a company because you want to see, you want to see your revenues going up and you want to see your expenses going down, which results in a higher net income or net profit for the company. Okay, the next line we're going to be looking at is called operating income or loss. So let's take a look at the trailing 12 months column here for Intel. And one thing I like to highlight is that if this number is positive, it's considered an income. And if this number is negative, it's considered a loss. In Intel's case, This is actually positive and it's quite a big number, 25 billion. So this is actually really good news. It means they have an operating income of 25.4 billion. And again, if you look at the overall trend year over year, that number is slowly increasing, which is a good sign. And what is operating income? So operating income is calculated by taking the gross profit, in this case, 45 billion. And subtracting this number from that. So total operating expenses. So let's go ahead and do that. So let's take 45 billion again, very rough number calculations, not really including any fractions there. So 45 minus this number here, 19.6. So you can see that the result is 25.4 billion, which is exactly what you see here. The two operating, total operating income of 25.4 billion. And another thing or another term you might hear is operating margin. So you might hear investors use that and it's again, it's a percentage ratio that they use to quickly compare companies to companies or stocks to stocks. And the way it's very easy to calculate, and I can show you that now the way you calculate that is you take, again, you take your total, your operating income and you divide it by your total revenue. So let's go ahead and do that. So I'm going to take my operating income here, 25.4 billion, 25, 0.4 divided by 75.7, which is my total revenue. And this number is percentage, so it's actually 33%, but you can go ahead and multiply by a 100 and then you get 33.5%. Now what does that number mean? And by rule of thumb and operating surgeon, anywhere between 15 to 20% is considered way good and very healthy for a company. So anything above 15% is good in Intel's gaze is actually 33%. So it's actually more than double the recommended percentage, which is 15. So Intel is actually doing exceptionally well in terms of operating margin. So again, rule of thumb, anything over 15% is good and in Intel's gaze is 33%. Now one thing I recommend is go head and calculate, go back to the AMD stock, calculate the operating margin, and compare that with Intel and see what you get. The next line is called the interest expense. And what that is, is the cost or the expense or the money that company, in this case, Intel has to pay back to the original source where they borrowed money from. So for example, sometimes companies need to borrow money from banks or credit unions, sometimes through bonds. And over time, when you borrow money, it accumulates interests over time and you have to pay back that interests. So in this case, Intel, for example, in 2 thousand in year 2019, intel actually paid back 489 million in interest. So this number, it says 489 thousand and just keep in mind that these numbers are in thousands, so times 1000 and then you get 489 million. So this is how much Intel paid back in interest to the source they borrowed money from in 2019. And this is for the trailing 12 months. And the next line here is called total other income sludge expenses, net. What you can think of this is sort of like an income or expense that doesn't necessarily tie into a business day-to-day operation. So if, if this number here is positive, is considered an income, and if it's a negative, number is negative is considered an expense. In Intel's case is positive, so it's considered an additional source of income for the company, which is great. And then the next line here, you have income before tax. So and that equals to 26 billion. Simply the, simply the way to get this number income before tax is you take your operating income or loss and you subtract the interests that you paid, and then you add on this number. This number could be positive or negative depending on whether that it's income or an expense. And then that's how you get this income before tax. Now one thing I'd like you to realize here is that when you're adding or subtracting these numbers, they don't always add up to exactly what you anticipate for a couple of reasons. One is Yahoo Finance is a free tool, so sometimes information is not up to date or sometimes is lagging, and it's not always in real-time. And the other reason is that sometimes they just because this is a very high level summary of the income report, financial or financial report. It doesn't have all those details or breakdown. So if you wanna see more details or break down, you'd have to go and look at the full income statement or consolidated financial statement that you can obtain from the company's website, which I'll show you how to do that. But just something to be aware of when you're adding and subtracting numbers, they might not necessarily always add up to exactly what you think they should. So the next line here, we have the income tax expense. So this is how much the company has to pay in income tax. So this was the operating income of the company and this is how much they have to pay in taxes. So for example, in 2019, the income before tax for Intel was 24 billion and they had to pay 3 billion in taxes. So you take this number, which is your income before tax, you subtract the tax from it, and then you get 21 billion. So 24 minus three equals 21 billion. And this is what we call income from continuing operations or simply net income. So net income is the important number you're looking for here. From the company, from the income statement. Again, this is another important number or you should be paying attention to. Again, this is something you want to be seeing that it is continuously growing year over year. So net income is something that as a name mentions, is the net income. So it, it takes the revenue and subtracting all the expenses cause a revenue, salaries, research and development, taxes, interest, and all the costs associated with the business. And then it subtracts all of that from the revenue. And then you're left with the profit after everything. So that's what net income is. So here you can see that year over year for Intel, net income has been increasing, which is a great sign. So we went from 10 million to a little bit less 9.6 billion in 2017. But from 20172018, Intel's IS significant growth in net income. Why do you think that is? Do you think it's because the revenue went up? So if you subtract this number here, 21 billion minus 9.6 billion, you get approximately 11.4 billion. So the net income went up by 11.4 billion. But do you think that's because the total revenue went up by 11.4 billion? Well, not really. Let's take a look. So here you got in 2017, you got 62.7 billion and in 2018 you got 70.8 billion. So if you subtract these numbers, let's go ahead and subtract 70.8 minus 62.7. So you got about 8 billion worth of increase. But if you go down here on the income statement, you have around 11.4 billion worth of increase in the net income, which is the income of the company considered after all the expenses and costs associated. So why do you think that is? It's not all from revenue, so yes, part of it is from revenue. But one thing I like to bring your attention to is this part here. So take a look at the income tags Intel had to pay. In 2017, they had to pay about 10.7 billion worth of taxes. And in 2018, they only had to pay about 2.2 billion worth of taxes. So this is a significant, considerable amount. So I don't know why and you can't really tell by looking at this report why Intel had to pay 10.75 billion in 2017 by you can see that the next year they had to pay significantly less. So when you have significantly less expensive just tags, then that also increases your net income significantly higher. So again, keep in mind, always keep an eye on these things to know why the income is going up. So in this case, Intel had to, they had an increase in revenue, but they also had to pay significantly less amount of taxes the year after, which contributes to that significant growth in net income the next year, you can see that the Intel actually had to pay around roughly a little bit more than the previous year. So three billions, that of 2.2 and the net income roughly stayed the same. So you can see in 2018 it was 21 billion and in 201980 was also 21 billion just because they didn't have that sort of tax break like they did in 2018 compared to 2017. So just something I wanted to point out and I would like you guys to also keep an eye out on these things when analyzing the income statement. 6. Balance Sheet: In this section, we're going to focus on analyzing balance sheets. Balance sheets are financial statements or reports that publicly traded companies have to make available to the shareholders. And they're usually available freely through Yahoo Finance. So if you navigate to Yahoo Finance and if you put in the company or the taker that you're looking for. In our case, it'll be Intel Corporation sticker symbol IN Tc. And if you click on the financial step, the first thing, the first statement that loses the income statement, this is the one we're looking for in the middle called balance sheets. So go ahead and click on that. And that should load the balance sheet statement for the company, Intel. And as you can see here again, we have two different timeframe. So we can look at the balance sheet annually. Or if you want to look at some recent data or results from some recent earnings over the last few months. You can also switch to the quarterly timeframe is that if that's what you want to look at, balance sheet statement tells you a lot about a company's financial health. It shows you things such as the company's equities and assets and also liabilities such as debt. So where it is very important to understand and learn how to interpret these numbers. So let's go through an example together. Okay, so let's start with assets. So an acid is something that is owned by the company that can be sold for cash. Now we have two major asset sections. We have current assets and we also have noncurrent assets. So let's start with current assets. Under current assets, we have cash and as you can see, for the year of 2019, Intel has approximately 4.2 billion worth of cash and cash equivalent. And they also have other short-term investments for the year. And those are, you know, any investment that the company Intel is involved with or invested in, and they're valued at $8.9 billion approximately. And if you add these two numbers, you get the total cash of 13.1 billion for the year of 2019. Next we have the net receivables. And this is the amount of money that the company is owed. So for the year 2019, Intel received about 7.6 billion in net receivables, which was the money that they were owed. Then we have the inventory. So most companies produce, produce a product and they have an inventory of that product. In Intel's case, there's semiconductor company and they make CPUs and processors. So they have an inventory of CPUs, for example. And in 2019, the value of that inventory was approximately $8.7 billion. You have your other current assets. So in this case, Yahoo Finance doesn't really provide a lot of detail or breakdown of what these things are. But you can just assume that this is a set of assets that could be turned into cash for a value of approximately $1.7 billion. So in this case, they actually did turn it into cash because this is historical data. It was in 2090. And if you add all these numbers here, so the two from the under the cache section and the net receivables, inventory and other current assets. Then you get this number here, 31.2 billion, which is the value for your total current assets. And what total current assets are, are the assets of the company that can be turned into cash or liquidated into cash over the next 12 months or within the next 12 month. Now let's move into the non-current asset section of the balance sheet. So what non-current assets are or in the company's assets that will not be converted into cash within the next 12 months. So first you have your property plan and equipment. So Intel owns a whole bunch of property. So for example, offices where employees and engineers can actually go and work their plants and equipment for manufacturing and assembling those chips. And the value of those assets are approximately or were approximately a 128.7 billion in 2019. And right below it you have the accumulated depreciation. So this is anything that actually depreciated during the year of 20191 example is, for example, for equipment until might purchase some robotics to actually assemble the chips in the plant. And those have, because those are mechanical, they have wear and tear so and they might require maintenance over time. So that weren't actually causes some depreciation. That's just one example. But you can see that Intel has highlighted that the accumulated depreciation for the year of 2019 was minus 73.3 billion. And then if you take this number and subtract it from this one, that gives you your net property, which is the total value of $55.3 billion. Next you have equity and other investments. So again, Yahoo Finance doesn't really do a very good job in breaking these down. You just have lump-sum number in here of approximately 7.2 billion in year of 2019. But one way of thinking about this is these are the sort of the investments that the corporation is involved with or investments that they have a stake in. Next, we have goodwill and intangible assets. So goodwill and intangible assets, you can think of these sort of like assets, but not really because they can't really be turned into cash. So for goodwill, one thing, one example I can provide is that imagine there is a new startup or a new company. That has some sort of new technology and Intel is actually interested in that technology. So then they want to acquire that company. Now let's say the value or the market gap of that company is 1 billion. Well, Intel can't really offer them 1 billion because that's what their work. They have to pay more or they have to pay a premium. So let's say instead, Intel offers them $2 billion to buy out the company and the company accepts. So the difference here between the company's worth and the premium that Intel paid, which in our case is $1 billion. That's the amount that will show up on their goodwill. This is one example of the goodwill. And the amount of goodwill for year 2019 was approximately $26.2 billion, then you have intangible assets. So very similar. Intangible assets again, are assets that can be turned into cash. And they covered things such as like the brand name or logo or things like that. And the value for that in year 2019 was approximately $10.8 billion. And then below that you have other long-term assets. So again, you don't really see a breakdown for this. You just see the value which is 2.1 billion for that year. But you can probably see more finer breakdown of this. If you take a look at their consolidated financial statement, there's probably more detail there, but Yahoo Finance just shows you the total long-term assets. And again, remember, these long-term assets are assets that will not be turned into cash or liquidated into cash anytime in the near future within the next 12 month. And if you add these numbers together, the year 2019, you get your total non-current assets and the value of that is approximately a $105.2 billion. And then right below that you have your total assets. So this is a very important number because this tells you the total assets for Intel's cooperation in the year of 2019. And the way you get this number is that you add the number from total current asset and you add that number which is, which is 31.2 billion. You take that number and you add it to total non-current assets, which is a 100 and fiv billion for a total assets of $106.5 billion. Okay, so now let's move on to the liability section. So as you can see here, liabilities are the amount of money that the company owes. So one example is debt, and this is the amount of money that the company has to pay back. Let's start off with current liabilities. Current liabilities is the amount of money that the company has to pay back within the next 12 months. So anything you see under the current liability section. So for example, current accounts payable, accrued liabilities, or any of these numbers you see here, they have to be paid within the next 12 months as of this date. So again, the first column here represents the year 2019. So if we scroll up here, you can see that this was the numbers reported on December 31st, 2019. So going back to the liabilities, anything you see that's under current liabilities is the amount that the company has to pay back within the next 12 months. So let's take a look at current debts. So Intel had roughly about $3.7 billion worth of debt that they have to pay back within the next 12 months. Then we have accounts payable or for short, AP accounts payable is the company's obligation to pay back this amount of money to their creditors and suppliers. So this was roughly about $4.103 billion. Next, we have deferred revenues. Although you don't see a number listed for deferred revenues for the year 2019 or 2018. Deferred revenues is the amount of money that the company has gotten paid for the product that has not yet been delivered. So for example, Intel's customers need to buy chips from them. And in order to buy chips, they need to place a preorder for a specific number of chips or CPUs. And from a company's perspective, because that product has not yet been delivered, it's seen as some sort of debt. So until into fully fulfills the order and delivers all those ships that inside the pre-order, that number would actually show up here. Lastly, we have other current liabilities. So as you can see here right now, Yahoo Finance doesn't have any number here. It could be for number of reasons. For example, either this is out of date or the number was just not there. For example, a could have been 0. Other current liabilities, but a better place to go to actually get more recent number or more accurate number and a better breakdown of what things would go under other current liabilities. It would be the companies investors relation website. So whatever company you're actually researching, you can go to their investors Relations website and they should have their consolidated financial statements, including the balance sheet information there. And that would do a much better job at actually showing you the breakdown and the numbers. And the last thing or the most important thing here is the sum of all the current liabilities. So this is reported on their total current liabilities. And as you can see, Intel has approximately $22.3 billion worth of liabilities, which they need to pay within the next 12 months. Next we have the non-current liability section. So this is, you can think of this as the amount of debt that the company owes or the amount of money or that they have undertaken. But they don't necessarily have to pay this, these liabilities back within the next 12 months. So you can think of these as long-term debt or liabilities, which they could take years to actually pay. So the important thing to understand is anything you see under non-current liabilities. They are long-term and they don't have to be paid back within the next 12 months. So actually the first thing you see is actually long-term debt. So this is the debt that the company doesn't have to pay back anytime soon. And in Intel's gaze as of 2 thousand end of 2019, it was approximately $25.3 billion. Next we have deferred taxes, liabilities. So this is very simple. It's just the amount of tax that the company has to pay, but they have not yet paid it. So in Intel's case, this was approximately $2 billion. And then for deferred revenues and other long-term liabilities is the exact same thing as we already discussed earlier on top here. The only difference is they don't have to be paid within the next 12 months, so they're more long-term. So now, if you add all the numbers, this would give you the total non-current liabilities. So in Intel's case, it was actually, it was roughly about $36.5 billion as of the for the year 2019. And if you actually write underneath that you have total liabilities. You so if you take total current liabilities and you add it to total non-current liabilities, you get your total liabilities. In Intel's case that was approximately $58.9 billion. Next we have the stockholders equity section. And the first thing in this section is called Common Stock. One thing to note about this number is that this number doesn't represent quantities, so don't think of this as the number of shares or anything like that. We're looking at the balance sheet financial statements. So this number is actually representing a dollar amount value. So in this, in this case it's $25.2 billion. And so what is common stock and what does this number really tell us? So common stock is the number of shares that the company has sold at par value. So in order to raise capital, companies have to sell shares. And from selling those shares, they take that money and they reinvested back into the business in areas such as R and D to help the business and the company grow. So well, you can think of this is that let's say for example, the par value of Intel is actually $20. So what this number represents is Intel, say, selling a certain number of shares multiplied by 20, which will give us 25.2, or roughly $25.2 billion. Now we don't really know what the number of shares is or the, what, what the par value of Intel is by just looking at this. But that's, that's how you get this number by multiplying those two things. Now, when this company sell those shares, they don't sell it at actually par value. They sell it at the current value or something that's much higher than the par value. So in an example that we just used, we said Intel's par value is $20. But when, when the company is selling shares, they'll be selling it at the current value or something that's much higher than the par value. So for example, let's use $50 for Intel. So intellectually these cells, the shares at the $50 value, but what this number is reported when whatever number you see reported on their common stock is only the portion that was sold at $20, which was the par value. So the remainder which is the offset that $30 that doesn't get reported on their here, that gets reported on their capital gains, which will be in a different section of the financials. So to just simplify things, we can just think of the number of shares multiplied by r value just to represent this number. Now one thing I'd like to mention about common stock is that you would like to potentially see this number go down over time because you don't want to see the company just keep selling more shares and more shares and more shares over time. Because first it, it tells you that one thing is that the revenue or the net income is not enough of it for the company. And they constantly have to raise capital because they don't generate enough revenue. The other thing is, when the company sells more Shayla shares, it actually dilutes current shares in the pool. So as an investor, you don't want your shares to get diluted. So the more the company sells shares out there, the more diluted those shares become. And that's not a good thing as an existing shareholder in the company. Why you would want to see, is you want to see the company actually selling less shares and actually buying back more shares. Because when the company is buying back shares, that's a really, really healthy financial sign because that means they've already spent that. They use the revenue and the cash they have at hand to deal with things such as dead and liability and payout dividend if the, you pay dividend. But they're also using the money to buy back shares, which is a really good thing as an investor because that also equates to less dilution in the pool. On their common stock. We have retained earnings. Retained earnings is the net income generated by Intel after paying dividends to its shareholders. So we scroll up here and we go back to the summary tab. As you can see here, dividend pays its shareholders a dividend or cash amount for every share that you hold as an investor. So in this case, as of right now, intel pays 2.64% dividend annually, or $1.32 per share annually. So going back to financials and click on balance sheet. And if he go down here, this retained earnings here, this number, this is Intel's net income after paying those dividends to the shareholders. And as you can see here, for the year of 2019, that number was actually $53.5 billion. And if you just quickly look over the years from 2017 to 2008, sorry, 2016201720182019, that earning has just grown, which is a really good sign. So we have forty billion, forty to 50.553. So this is actually a very good sign. Next, we have accumulated other comprehensive income, and as you can see, this is cut-off with ellipses here, dot, dot, dot. But one thing you can do is you can hover your mouse over it and it'll show you a tooltip which has the full name. So accumulated other comprehensive income. And this is the unrealized gains or losses that Intel as a business had to go through in that year. So for example, in 2019, that number was minus 1.2 or roughly minus $1.3 billion. Then we have the total stockholder's equity and how you get this numbers. So for example, for the year of 2019, this was $77.6 billion. And how you can calculate this number is simply, you can scroll up here and you take the total assets. So a 136.5 billion and u minus the total liabilities from that number. So a hundred and six hundred and thirty six billion minus 58.8 billion, and that will give you $77.6 billion. So that's the, that's how you get total stockholder's equity. And the last thing year in the balance sheet is called total liabilities and stockholder's equity. And this number is simply the total assets of the company. So if you look here at a 100.5, $136 billion, if you scroll up to the total assets, this is the same number here. 7. Cash Flow: In this section we're going to cover how to analyze a cashflow financial statement. So in Yahoo Finance, let's look for the company Intel Corporation ticker symbol IN TC. And let's scroll down here and click on the financial stamp. And over here on the right-hand side, I have cashflow. So click on this tab. And as you can see here, Yahoo Finance now loaded the cashflow financial statement for Intel Corporation. Now, please note over here that you can look at the numbers on an annual basis or on a quarterly basis so you can switch between those two over here. And one quick note on the TTM column. Again, this stands for trailing 12 months. And what this column represents is the sum of all the numbers or data for the last four quarter earnings. So if you want to look at recent data or the last four quarter earnings or last five. Then you can just quickly look at the numbers in this column. And if you click on the quarter here, quarterly tab. So over here we have the last four quarters that we can see. So let's just use the example Net Income ROE here. So if you take this number here, 5.9, let's say that six, this is 7 billion, this is 5.5 for example, and this is five. If you add these numbers here together for the last four quarters, for the net income, you end up with approximately $23.6 billion. So instead of looking all these numbers individually, you can just look at the TTM column. If you're just looking for some recent data on the company you're trying to research on investing. Now, the cashflow or understanding of the cashflow statement is very, very important because cashflow statement shows you the money or cash coming into the business and the cash or the money going out of the business. So understanding that inflow and outflow of money is very important because you can take that number or when you know how much cash or money accompany has, you can take that number and you can compare it to the liabilities of that company such as debt. And then you can run calculations on things such as how long it will take the company to pay its debt or other liabilities using the cash they have at hand. So without further ado, let's get started. The first section in the cashflow statement is called cashflows from operating activities. So all the numbers you see under this section, really the money or the cash generated from businesses day-to-day operations. And the very first number here, or first row is called net income. And as you can see here, the net income for the year of 2019 was approximately 21 billion. Again, remember these numbers are all in thousands of whatever number you see here at three zeros. So over here we have 21 billion for net income. And this number, we already covered this net income number in the income statement. So if you click on top here on the income statement, you'll be able to see that number here. So it's just reported again on the cashflow statement, but we don't need to cover it because we covered that in the Analyzing the Income Statement section. Under deferred income taxes, we have stock-based compensation. Stock-based compensation is when a business or a company or corporation chooses to reward their employees with stocks or shares instead of cash. So sometimes when employees perform well, they get a raise or their salary increases. Sometimes instead of getting a raise or salary increase, they get stock options. And one example is for the management team or executives in the, or in the company. If the company hits a really important milestone or meets a very important deadline, then the board of directors may decide to reward them with shares of the company. Also, another example is some companies have a stock match program. So for example, for every dollar and employee puts into the stock, they might match it by 30% or 50%, or sometimes even a 100%. So that's another example of stock-based compensation. But in general, this is when the company is actually rewarding employees with stock options instead of just cash. Under stock-based compensation, we have change in working capital. And if you remember, we covered assets and liabilities and company's current assets and current liabilities in analyzing the balance sheet statement. So we can go back to that and look at the numbers on their balance sheet. But the way you can calculate the number for changes in working capital is you take the current assets minus current liabilities. And that's how you can get this number here. So in Intel's case, where the year of 2019, the change in working capital was approximately $1.15 billion. Now, what does this number mean? This number means that Intel generated approximately $1.105 billion in cash. And there's several ways a business can actually generate that get. So one way, for example, is the company can actually sell some of their assets to generate this cache and come up with the money. Or the company can actually take on new debt. So for example, it can get more loans just to generate that cache. So there are several ways. And as you can see here, intel, in Intel's case, for the change in working capital, Intel was able to generate approximately this much cash in the year of 2019. Next, we have accounts receivable. Accounts receivable simply means the money that is owed to a business. So in this case, this is the amount of money that is owed to Intel Corporation. So if you take a look at the year 2019, the amount is $935 million. And the reason for this number being negative is that this actually tells us as investors that their entities out there that owe money to Intel Corporation. And again, the reason this is negative is because this could have been cached. Coming into Intel, but instead, it's actually not cash coming into the business because this is the money that is owed to the company. Now, one quick note here, so we can see that for the year 2019, this number was nine hundred and thirty five million dollars. One thing as investors we want to keep an eye out and watch out for is that we don't want this number to increase over time. So for example, let's compare 20182019. So as you can see in 2018, this number was 1, approximately $1.7 billion. It's a negative number. And that has decreased by a lot to $935 million. And this is actually a good sign because if you see this number increasing instead, it means this is the cash that could have been coming into the business. But instead, the money that is owed to the company is just increasing and increasing and increasing. And that's not a good sign because then at some point the company is actually owed a lot of money. But instead, as investors, you want to see that that money that is owed is actually converted to cash. That means the entities that are all in the money are actually starting to pay back some of that debt to Intel. So in this case, this is definitely a good sign as seeing that this number has gone down year over year. This is something definitely want to watch out for to make sure this number doesn't go up year over year because that's definitely not a good sign and the cashflow statement. So one last note on accounts receivable whenever you see a positive number on accounts receivable. So in our example or in our case for Intel, This was the year of 2016. So as you can see here, we have a positive number of $65 million for accounts receivable. And as investors, how we should interpret the positive number on the accounts risk for accounts receivable in the cashflow statement is that this when, when the people or entity that are, that are owed money to Intel Corporation, when they start paying off that accounts receivable, that just equates to cash being generated for Intel. So when you see a positive number here, it means that the accounts receivable is actually being paid faster than it is growing. So people, people or entities that are owing money are actually paying those faster than the actual money owed is growing. So I hope that makes sense. Next, we have inventory. And in Intel's gates for the year of 2019, this was approximately minus $1.48 billion. And you can think of this exactly what the name says here. Inventory. So. Because this number is negative, you can, on a cashflow statement, you can think of this as the money Intel had to spend. So this is the cash going out because they spend it on inventory. And just one example for inventory is that knowing that Intel produces CPUs and chips, for example, they might have in 2019, they might have bought a poor purchase the warehouse to actually store a lot of these chips, for example. So that's just one example there. Yahoo Finance doesn't really show you the breakdown of what are the things that fall under the inventory category. But that's just one example I could come up with for you. So again, in Intel's gaze, the inventory was minus $1.48 billion. The important thing to note is that this is the money or cash Intel had to spend in year 2019 for inventory. So this is the cache actually flowing out of the business. Next, we have accounts payable, but we already covered what accounts payable is and what the numbers mean in the lecture when analyzing balance sheet financial statement. So if you'd like, please refer back to that lecture. Then we have other working capital. So working capital is pretty much the same as changing Working Capital, except I think Yahoo Finance is just trying to add up a whole bunch of numbers. So again, doesn't do a good job in showing you the breakdown of what the numbers are. If you're interested or if you're curious, you can look at the actual document or financial statement, and you can find that on Intel's investors investors relation website. So ten K will show you the breakdown of this and show you all the numbers here. They're just showing you the sum of all those breakdowns. And the same with other non-cash items. So here again, you self-awareness doesn't really first of all, until they didn't have any numbers reported here for year 20192018. But even if they did overhear, you don't really see the breakdown. So you'll have to refer to other financial statements if you were curious or interested to what those are and see the detail breakdown. I think the most important thing here is this row here. And this is simply the net cash provided by operating activities. So this is the sum of all the numbers. And what this means is that this is the amount generated by the business, or in this case, entails day-to-day operations. So couple things to note here for us as investors. Well, there's two things you want to watch out for. So first of all, you want this number to be positive, because if this number is not positive and is negative, it means that Intel is not making profits from day to day operations and that's a really bad sign. The second thing you want to watch out for is you want to see this number grew over time because this is literally the cash that is being generated for the business by the day-to-day operations. So you want that cash to increase and As you can see here, in year 2016, this was approximately 21.8 billion. Then in 2017.122 billion. Then in 2018 we saw a big jump to 29.4 billion. And in the year 2019 we see another semi big jump to $33.1 billion. So this is actually a good sign and this is a healthy growth. So you want the cash being generated by the business to increase over time. So definitely something to watch out for when looking at the cashflow financial statement. The next section in our cashflow financial statement is called cash flows from investing activities. And this section breaks down different types of investing that Intel as a corporation is involved in. And there are different types of investing here. So for example, one type is the amount of money or cash Intel is putting back into the business to help it grow. So that's one type, one type of investing. The company is investing in itself by spending cash and trying to help it grow. And the other type of investing is Intel as a company tries to invest in other companies. So for example, they could spend cash to buy some stake in a different company, or they could just spend some cash to completely acquiring accompany altogether. So this is quite common in the technology sector where bigger companies such as Intel, sometimes they need something done, but it's just cheaper for them to acquire a startup that does that thing for them, instead of them implementing it on their own. So it's just cheaper for them to acquire companies and those type of investments fall. In this section, that's called cash flows from investing activities. First thing in this section is called investment in property, plant and equipment. So as the name mentioned, this is the amount of cash or money Intel Corporation has spent on things such as property, plant, and equipment. So, and as you can see here, this number is negative, so negative four, this number represents that this is the cash being spent. So this is the outflow of cash. This is the cash the company is actually spending, so it is a cost to them. And this is the money or cash is being used to sort of invest back into the business. So, for example, you can imagine that Intel wants to grow their team or number of employees, and hence they have to purchase a building that they can house the number of however many employees that they want to hire. So that is an investment Intel is making in property. And other example is until needs to buy machinery to add to their manufacturing plants. So again, that number would fall under this category here. And as you can see here, this number was approximately 16.2 billion in year 2019. And again, the negative just represents the outflow of cash and the money that the company is spending. And this is not necessarily a bad thing because of what you do want to see. Is you do want to see the companies actually investing the cash they get from revenue or operational, day-to-day operations back into the business through investments. So the fact that you are seeing this number as a big number is not actually a bad thing. Also, the fact that you are seeing this number increase, that's also not necessarily a bad thing because as I mentioned, you do want to see the company invest. Because that's one of the major ways a company can grow by investing back into itself or by sort of acquiring other companies. So this is sort of what Intel is spending on its own business so that they can actually grow. And as you can see here, as I noted earlier, you can see this number increasing, which is a good sign. Next we have acquisitions. And this is simply the money Intel as a corporation spends to acquire other companies or other businesses. And as you can see here, in the year 2019 into approximately spent about $2.48 billion into acquiring other businesses. Now one thing I would like to note here is that you don't want to see this number being too high. Because, you know, if a company has healthy financial than if the company is doing pretty well, it's because they're investing or they should be investing their cash into themselves. So they have to take that cash and invest it back into the business to help it grow before going out there and start acquiring other companies. Because if the company has a good foundation, they, they can actually go ahead and start making acquisitions depending on the reason. And if they have a good reason that it does make sense, or if it's a good long-term investment, it does make sense. But you don't want to see, is this number being too high. So for example, if this number was 16.2 billion and instead this number was 2.48 billion, then that's actually a bad sign and it's a red flag to me. So you always want to see, as I mentioned earlier, this number kinda represents the business investing cash back into itself to help it grow. And this is acquiring other companies. So you don't want to see this number being too high all the time. Next in this section we have purchases of investments. So this is simply the amount of money or cash Intel Corporation has spent in a given time period on buying, for example, stocks or shares from a different company or investing in a different company, or for example, buying bonds or anything of that nature. So that would fall under this category. And as you can see here, until spent roughly about $11.48 billion in the year of 2019. And what one thing, this is actually not a bad thing, but the only thing to keep in mind is that if the company is doing well and the revenues grow, growing, and they're generating a lot of cash and they have a lot of cash and cash equivalent. It is ok. And it is healthy for the company to be investing in. For example, other companies or buying bonds or shares or common stocks of other companies. However, if the company is not doing well, they shouldn't be investing in other companies, they should spend that cash. Again as we go over this over and over again, they should be spending that cash into, back into themselves, so into the business to help things get back up and operational and where they used to be. So in this case, this is not necessarily a bad thing. So year-over-year entails purchase. Investment has been decreasing going from 21.5 billion to 16.4213.3 billion to 11.4 billion. So this is not necessarily a bad thing because either that cash, instead of being less ID here is either going back into the business and reinvested back into the business to help it grow and succeed. Or it's being used in other places. That could benefit the company more and more sufficient way. Okay, next up we got sales slash maturities of investment. And one thing to note about this number, this is a positive number, so it indicates an inflow of money into the business. So this is how much cash Intel generated for the year 2019 and it's roughly $11.4 billion. This category here, sales slash maturities of investment. What this is is that imagine into a made some purchases to invest in other companies. For example, they bought some bonds or they bought some shares by investing in other companies or buying shares for, of other companies to less than them. And when those bonds or other investments mature and they make a profit, that would be, that would get reported in this category here. Or for example, if Intel bought some shares of a company, they actually believed in last year, for example. And this year, those shares have gone up in price until it can sell those shares, take the profit, and those will be reported under this category again. So just remember, the positive means, the inflow of money and the cash being generated by Intel. And this comes from selling of previously purchased investments or previously invest, investments and purchases coming into maturity. And the profit is actually locked in by Intel. And the next section here, or the next category here we have other Investing Activities. And again, Yahoo Finance doesn't really do a good job in breaking down, so they just report the overall number. You want to see a breakdown, you can go to the ten K report and they will show you a good breakdown of things. The only thing, important thing to notice in here is that this number is positive. So it indicates that this was actually money or cash generated and the inflow of money into Intel. So in this case here, this was a cash leaving the companies or Intel had to spend that gosh, for whatever reason. And this is the money until all cash Intel gained from other Investing Activities. And over here you see the The last thing in this section is the net cash used for investing activities. And this is the number. You can just look at this number which is very important. So this is roughly $14.4 billion. And this is the overall amount of cash Intel spent in investing activities. And just looking at this, it's actually, this is not too bad because I can see that the biggest amount in this section was invested in the property plant and equipment section, which is actually a good sign because this shows that majority of the cash was spent on Intel themselves, not in other investments. And over here also as well until has made some previously good investments because they cash from those investments or the profits from those investments generated is approximately 11.4 billion. So this is a good sign. And yeah, this is basically how much cash Intel has spent in the year 2019 on investing activities. The next section in the cashflow financial statement is called cash flows from financing activities. So this over here, it shows you a breakdown of some of the things that intel corporation spends in terms of cash and money on some of their financing activities. So the first thing in the, in this section is called debt repayment. So this is how much cash or money Intel is spending to pay back some of the debt that is o. So this is actually a really good thing. So as you can see here, in year 2019, Intel spent about $2.63 billion to repay some of that debt that it owes. So this is a really good sign. You can see also in previous years is paying back some of these dead. So this is a healthy sign and this is the TTM column. So for the past four quarters, Intel has paid approximately $4.37 billion worth of debt. Now, this is exactly what you want to be seeing because if you see that a company has debt, which we saw on the balance sheet statement in terms of short-term debt and long-term debt. If you see a company has dead and they're actually not repaying that, that's a red flag. That's a really bad sign in terms of not having a healthy financial for that company. So this is definitely something you want to watch out for. And you also wanna make sure you're paying back debt because and these, some of these dead that is owned by the company also collects interests. So you want to try to pay that from some of the cash you have at hand. Next, we have the common stock repurchase. So when companies trying to, or publicly traded companies tried to raise money, what they do is they sell more shares to the public. So this means that they put more shares out there so that investors such as scan actually go in and buy those and invest long-term in the companies. And then they would use that money to actually grow the business. And what common stock. Repurchased means is that they're actually buying that those shares back or buying certain number of shares back. Or sometimes you might hear people refer to this as buyback program. So this is where Intel is actually spending money to buy back somebody shares in the pool out there. Now, there are a couple of reasons why a company wants to do that. And number one is when you buy a bag more shares, there's less shares out there, so it actually reduces dilution amongst all the shareholders. So that's number one. And another reason is that when you have, when you're buying back shares, there's actually ledgers again, shares out there. So that means that there is actually less supply. So when the demand goes, for example, if Intel Corporation has a phenomenal earning and all the sudden, investors noticed that and want to jump in and start putting money in there and start investing in it, then there's less shares out there. So the demand goes really high, but the supply is short. And when this happens, it actually moves the price up quicker than if they were more shares out there. So I hope that makes sense. So these are some of the reasons why the way they want to do that. Now, when a company is actually buying back shares, this is actually a healthy sign because it means that they have enough money to buy that those shares. Now, one thing I would like to notice or for the year 2019, as you can see, Intel spent about $13.6 billion to buy back those shares. And then a year 2018, they spent about $10.7 billion. And the TTM is the last four quarters. They spent about 12.2 billion. So these are actually pretty large numbers. Now as, as I mentioned, buying, buying back shares is definitely a good sign for a company, but it's not absolutely necessary. So it really depends on how the execs or the executive team or management and Intel decides what to do with the leftover cash. So in my opinion, if you have a lot of long-term debt or short term debt, you should try to use the cash to pay those things off first and then actually go head and repurchase some of that shares back if you have leftover money. So right now when I look at this number, as an investor, I would have liked to see that, you know, we spent about $2.6 billion paying debt, but we spent about 13.6 billion buying back shares. So in my opinion, repaying debt is actually takes higher priority than buying back shares because you don't really have the buy-back shares. It's not like, it's not like a very critical thing to do as a company. So i would probably focus more of the money on repaying the debt, then I would on buying back shares. But again, this is, this is, this is like decision that management has to make here. And they chose to actually spend more money on buying back shares than paying debt. So again, not, not a red flag or anything, but in my opinion, more money should be spent on paying back debt. On repurchasing stocks, but again, just seeing that the money is being spent on both, this is a good sign. So if there was nothing here, so if the number was really, really low, then I would really be concerned because they're spending the majority of the cash somewhere that they don't really have to. And instead they should focus on, you know, things like paying back debt, which is more critical to the company. Next, we have dividends paid. So this is kind of self-explanatory. So this is the amount the company or Intel Corporation is actually spending to pay out dividends or cash to its shareholders and reward them for being invested in the company. So looking at this here, one thing right off the bat that you can notice is that the year 2016, all the way to year 2019, there dividend has been slowly increasing. So from 4.9 billion to 5 billion to 5.5 to 5.5, let's say eight. So this is a nice, this is a really nice slow progression. So you see the dividends slowly increasing, which is really good. So if you're a dividend, if you're a long-term dividend investor, this is definitely something you want to see. You want to see a good track track record of dividend history and a good track record of increasing dividend history. Because this tells you that the company is slowly raising their dividend because they're bringing in more revenue and hence there, they have the cash to actually increase their dividends. So as you can see here, in year 2019, they gave out about $5.6 billion worth of dividend to their shareholders. And the TTM bill last four quarters. It's about the same, so it's about $5.6 billion approximately paid out in dividends in the last four quarters. Again, this is a good this is a good sign. You don't want to see too much dividend being paid. You want to see a nice slow progression. And also, again, same thing as I mentioned with the common stock repurchase. So dividends are nice, but if the company is having financial problems, they probably should not be paying out dividend because they need to reinvest that cash back into the business to make it stable first. And then once the business is stable and stores to slowly grow in terms of sales and revenue, then you can go back to actually paying the dividend. And some companies do that when there's some, some companies when they're not doing good in terms of financials and revenue, they actually either cut the dividend by a small percentage or even completely until they can get back on track and then they bring back the dividends again. So again, just the only thing to notice that in my opinion, paying that debt is more important than buying back shares or paying out dividends to investors. So the fact that I'm seeing that Intel is actually paying back debt, then I'm okay with paying out dividends as well. One thing I would watch out for is that both of these numbers are actually higher than paying back that. So as an investor, you do want to pay attention to these things. And the last item here is just called other financing activities. Again, no breakdown, but if you want to see finer details and a better breakdown, you would refer to their ten K document. And the only thing to notice here is just the sum of the numbers are in the year 2018, they spend about $748 million worth of in some investing activities, which you can't really see what. But as you can see you in the year 2019, this number is actually positive. So again, remember negative means this is them cash they spent. Positive number means this is the cash they generated. So this is inflow of gas, this is outflow the cash in the business. So in year 2019, they actually generated so they made money of about $72 million. And then TTM here, last four quarters is they spent about a $149 million in cash. And you can see over here you got the net cash used by financing activities. And in year 2019, that total to about 17.5 billion TTM is 9.3. Again, Next we have net change in cash, and this is simply how much cash Intel Corporation actually added to their cash pile or to their cash position. So you can see that in 2019, until actually added approximately $1.2 billion worth of cash or money to their existing catch ball. So this is actually a really good thing because you do want to see that company or the company you are investing in is actually increasing their cache file. And if they're losing cash all the time, that's a really bad sign and that's a red flag because if they don't have enough revenue on cash to pay the debts, then they'll have to use it from the existing catch ball and then you end up eating at your savings slowly, which is not good. So you want to slowly increasing cash, but as time goes on, and one thing to note is that so in year 2019, Intel is a positive number, so it means Intel added approximately $1.2 billion to their cash position. But in year 2017 and year 2008, this number was negative. So let's ignore 2018 and let's go to 2017 because this number is quite large. So intellectually lost about $2.1 billion worth of cash from the existing. So not only they didn't add cash to their position, they lost cash from that cache file. So this is not good. So what we need to do is we need to sort of look into the reasons why. And just by looking at this, what's in front of you might not be able to tell why. So you might have to dig a little bit deeper and find out why this number is pretty high here and it's negative. So one thing we can do though, if you scroll up a little bit, you can see that if we go to the actually over here. Section from investing activities. You can see that let's compare actually year 20172018, so sorry, 20172019. So in year 2017, Intel spent about $11.8 billion. So let's say roughly $12 billion in investment in property, plant and equipment. And in year 2019, the expendable 16.2 billion. So definitely they spent more money, about 4-5 billion more money in 2090 that they did in 2017. But let's go one row down here. Sorry, let's go to rows down purchases of investments. So you can see that in 2017, Intel spend about $16 billion in purchases of investment. And in year 2019 they only spent about $12 billion or $11.4 billion. So it's almost like the money that was spent in investment property. It's almost like it's reversed. So we can actually called them. We can say that they can cancel each other out because in over here until spend more money in 2019 than they did in 2017. And over here until spend more money in 2017 than they did in 2019. And those numbers are pretty close. They're not exactly the same, but they're pretty close for us to quickly make an assumption that we can just say they sort of net to 0 in terms of change. And then once we actually have that net 0, if you just look at acquisitions, you can see this number is huge. Intel spent about $16 billion in acquisitions than in 2017 and in 2019, they only spend about $2.5 billion. So this is almost like five or six times more they spent in 2017. So it does make sense because they spend so much more money in 2017 than they did in 2019 in acquisitions. To me, it does make sense why in 2017, the actual net change in cash is negative. So they actually lost money because they had to dig into that saving and spend some of that cache. So this is one sort of quick thing I actually do when I'm looking at financial statements. Again, you don't get the full story budgets looking very often dig deeper. You have to look into more ten K financial reports. And because they have a finer breakdown, you have to look at news to see what they acquired. What did they acquire a company that they acquire part of the company and so on. So definitely keep an eye on that when you're looking at the net change in cash. And the next two rows are pretty self-explanatory. So cash at the beginning of the period. So since we are looking at a yearly or annually financial statement, this means that this is how much cash Intel Corporation had at the beginning of year 2019. So from January first 2019 and cash at the end of the period. So this is how much they ended the year with. So as of December 31st, say for 2090. And as you can see that this number is higher than that number, which means. This is actually a good sign. It means that after one year until ended, their cash position hires. So this is 3, this is 4.19. So let's say for 0.2. So Intel actually added approximately $1.2 billion to the cash position when, when they ended the period when this is actually, which is really a good sign. The last section in the cashflow financial statement is called free cash flow. And the first item in this section is called operating cashflow. So what operating cashflow is, is the amount of cash generated for the company from operating activities and for intels operating cash flow in Year 2019, you can see that this number was $33.145 billion. Now if you're wondering where they're getting this number from, this number is actually coming from a little bit earlier in the same financial statements. So remember 33.145 billion. So if you scroll up here, there is that number, so 33.145 billion. So this number is the exact same number as net cash provided by operating activities. So what they're doing is they're simply taking that number and reporting it down here for operating cash flow. And the next item in this section is called capital expenditure. And as you can see here, this is how much cash Intel spent on capital expenditure. And this is coming from the investing activities such as the as we covered in the investment on property, plant, and equipment. So if you're wondering where this number is actually coming from, $16.2103 billion. If you scroll up, that's this number here. So as you can see, they're taking it and reporting it from here. So $16.2103 billion. This is the investment in property, plant, and equipment. So this is the actual money that was invested back into the company to help the business grow. And the last item in this section is called free cashflow. So free cashflow for Intel in year 2019 was, let's say approximately $17 billion. And how you calculate that is you simply take this number and you add it to this one, but this number is a negative. So you technically taking 33 billion and subtracting 16 billion from that, and then you end up with $17 billion. And so this is Intel's free cashflow for the year of 2019, approximately $17 billion. Now, what does free cashflow mean? Free cash flow means that the company's cash bile or cash position that can be freely spend on anything. Now, what, what that is and how it's spent, what they spend the cash on and how they spend it. That's that's the decision of the management and the management team and the upper level executives of the company. So they decide how and when and what to spend that money on, which is the free cash flow. Now. There are a couple of things I want to mention that are very important and us as investors should pay attention to. So number one, you actually want to see positive cashflow, so or positive free cash flow. So you want to see this number being positive because if this number is negative, as I mentioned earlier, it means that you're losing money from your cash pile. So imagine you have kinda like a piggy bank and you just keep saving money and saving money and saving money. You want the savings to grow. So later down the road, if you need it, you can actually tap into it. But if you don't need it, you just want to keep adding onto it. So as investors, we want to see the company increasing their free cash flow year over year. So that's one thing. Actually, that was the second thing I wanted to mention, but the first thing is making sure that this number is positive. And I'm looking at from starting from year 2016 over here to 201720182019, all these numbers are actually positive. So number one, that's a good sign, TTM, which is the last four quarter, that number's positive good sign. And the second thing I wanted to mention is you want to see this number is increasing. So you wanna see year over year or period over period. You want to see this number increasing because the investors want to see that the company is growing their cache file. Because it means that later down the road, one, if something unexpected happens and the company needs money to deal with it, they can use this free cash flow or if they just need money to, you know, maybe a very good unexpected opportunity arises and the company needs money doing less than it, then they guy actually choose to use this money. So you want to, you want to see the increasing cashflow so that you can later use this to actually put back into the business to help it grow much faster. And in this case, in Intel's case, I'm actually seeing this happened, which is good sign. So if you're seeing that the free cashflow went from 12 billion to 10 billion. So it actually decreased year over year from 2016 to 2017. So to me that's actually a bad sign as an investor, I don't want to see that I want the number increase not decrease. However, this number is still positive and anytime after that the number just increase. So even though from here to here it actually decreased. Then starting with the next year, it actually increased by quite a bit. So it went from 10 billion to 14 billion. And then from 14 billion in 2018 to almost 17 billion, so increased by approximately 3 billion in 2019. So this is actually a good sign. I'm not too worried about this. So seeing this number getting increased three years in a row, that's a really healthy sign in terms of financial statements and looking at the company's financial health. Because I do want to see the free cash flow going up. And that's exactly what I'm seeing here. Also, as I mentioned earlier, I was a little bit concerned looking at this thing here. So looking that the company is actually making payments to repay back, somebody did that it owes. But then spending a lot more than that, almost like six times more, more to repurchase some of the stocks or spend it on buyback program. This kind of concerns me because I want to see those numbers actually reversed. I want to see more money spent in debt repayment than I want to see in common stock repurchase because I think in my opinion, the company should focus on paying back debt because if you're not paying back, you're dead. You are actually that that is just going to grow, especially if it has interests. And then later down the road, you can get the company into trouble if he just grows and grows and you're not repaying that. So number one priority as an investor, I wanna see spending the most amount of money on debt repayment. And then if there's money left or there's more free cashflow, they can spend it on. Comments, stock repurchase and buying back somewhat that stock. Same with dividends Bay. I, they're spending a lot of money on paying dividends. So $5.6 billion here on dividend, while they're only paying about 2.6 billion in debt. So this is not this as an investor, this would concern me because I want to see this number higher than both of these numbers, which I don't in this case. But then coming down here, I see the huge free cashflow. So I see that they have approximately 7, $17 billion worth of free cashflow. So that kind of releases my concern because I know if something was to happen or some unexpected. If a negative news comes out or something unexpected comes out, they have a lot of money. $17 billion is a lot of cash. 8. Terminology and Calculations: By now you should have a pretty good idea of how to analyze the three financial statements for a publicly traded company. So the income statement, the balance sheet, and the cashflow. You should also have a good idea of what are some of the things you need to watch out for? What are some of the trends you need to watch out for? And what are some of the red flags you need to look when going through these financial statements. In this section, we're going to cover some terminologies and their definition and meaning. We're also going to perform some calculations to extract some very valuable information that can help us as investors with making some decisions. And also we'll cover some other metrics that could help us when it comes to deciding whether a company is worth investing in or not. Ok, so when you're analyzing the income statement is imperative for you to take a look at the revenue and ensure that the company is constantly increasing the revenue. So, and by a good amount, I should say. For example, if a company, just any random company last year, they made 40 million. You don't want them to see next year making 41 million. I mean, 41 million, that's about a 1 million growth. But it's actually not that much growth. But, you know, if a company made 40 million last year and 50 million next year, Now, that's a good amount of growth, or even 55 or 60 million, that's a huge amount of growth. And that's the sort of company you want to be invested in because those are called growth companies right? Now, not all companies are going to be growing like that. Usually when a company, company is that it's early stages or the business is at, is at its early stages. It's easier for them to grow more rapidly because they have a lot of innovative ideas that haven't been established yet. They don't have the clientele. So as they actually, it's easier for them to grow and innovate. But then when the company becomes established and becomes massive like is from a small company becomes a medium or big size company or a large market gap, then their growth will definitely slow down. And that's OK. We just means that they can't grow as fast as when they were smaller in size or smaller market cap. And that's just natural because the more you innovate, you'll start to run out of ideas or creativity. So your, your syllabi will have growth, but your growth rate will decrease over time as you get more established. And also as you, you know, you have less ideas in terms of innovation. So that's quite natural. And so this is definitely something to look out for. You wouldn't want to see this number being positive and you want this number to be increasing if a, if a company or a publicly traded companies increasing their revenue quite rapidly and the difference is huge. Over here. Intel is not, the difference is not. That usually can see went from fifty nine billion, two, sixty two billion or 63 billion. So the difference is still growth, but it's not huge, right? And if you see a company that grows their revenue quite rapidly and it's a huge difference every year, year, year over year. Then those are called growth companies, right? If you see companies that are, you know, they have a good balance sheet, they have a good cash flow, and they are slowly. They have a good income statement, they're profitable, but the revenue growth is actually slowly increasing. Most likely they're large gap established companies and their moral value investment, not a growth investments. So that's definitely something to watch out for. But at the end of the day, you want to make sure the revenue is increasing constantly and hopefully by big numbers. The next thing you want to watch out for is the gross profit. Again, you want to see these numbers increase. And also when you're looking at the operating income or operating income or loss, you want this number to be positive and you want it to be increasing quite well because if, if this number is negative, it means the company is not profitable rate. And also the last thing you should be watching out for is the net income. You want this number to be positive and you wanted to increase, just like the revenue. You want this number to increase, continuously increase and be positive. If it's not positive, it means the company is not making profits. Now sometimes you might hear some people or some investors use the terminology or the ward top line and bottom line. What does top-line? Meanwhile, top-line is simply referring to the total revenue. So when here's somebody mentioned the phrase top-line, they're just referring to the total revenue here. So in Intel's case in 2019, the top-line was approximately 72 billion. So top-line simply just means total revenue. Now why is it called the top-line? Well, it's just because it's the first thing on the income statement. So it's the most it's the thing that's the first thing on the list and it's on the top of the list. So that's why it's called top-line. Bottom-line, if somebody or an investor using the word or phrase bottomline, there's simply referring to the net income. So whenever you hear net bottom line, sorry. Whenever you hear bottom-line, they're referring to the net income. And as you can see in 2019, the bottom line was 21 billion for Intel. When looking at the balance sheet, always store with cash and cash equivalents. And you want this number to be positive and you wanted to continuously be increasing. Because if a company has a lot of cash and cash equivalents, for whatever reason, if they ever go through hardship or like difficult times, they have enough money and cash to support them get through at right? Or for example, they have enough cash if they want to expand or make an acquisition and by out another company. So always watch out for that. On the balance sheet. You should always also look for assets and liabilities, right? So you always want to compare the total current assets with total current liabilities. And you also want to compare total assets, total liabilities, right? You always want both the current assets and total assets to be higher than the current liabilities and total liabilities. And that's what a good balance sheet has or that's what a good company has on their balance sheets. So again, take a look at the total current assets. So in this case we've got 31 billion. Look at the total current liabilities. We've got 22 billion. So. One is much bigger than 22. So this is looking good for Intel and take a look at total assets here. So we got 136 billion and let's take a look at total liabilities. We got 58 billion. So the total, total assets is much, much bigger than total liabilities. So this is actually a good balance sheet for Intel because their assets, our way, their liabilities, which is always what you want to see as an investor or when you're analyzing financial statements right? Now, there's a term that's used out there in the investment world and it's called current ratio. What does current ratio mean? It's simply the total current assets divided by total current liabilities. So let's go ahead and calculate that for Intel's case. So Intel has 31 billion. So let's go ahead and do that. So I'm not gonna put 31 billion. I'll just put actually Sure, I'll put the whole number. So 31239000, so that's million. We need to add another three zeros, 123, right? And then divide it by. Let's take a look at the TOR, total current liabilities. So we got divided by 22310000 and then 000, right? And then let's click on equal. So then Intel has a current ratio of 1.4. So any current ratio above one is good because that means that the total assets, total current assets, or total current assets, are bigger than total current liabilities. So any number higher than one is good. Now the bigger the number, the better obviously. So this is something you want to watch out for. So again, total, sorry, current ratio, simply total current assets divided by total current liabilities. So that's the definition of current ratio. And the other thing that I would like to highlight is this total stockholder equity as we cover it, this is the total assets of the company minus the total, the company's total liabilities. So total stockholders equity is total assets minus, minus total liabilities. Now, this is also referred to as the book value. So when you hear someone use the term book value, they're referring to this number here. There's, it's the same number as the total stockholder's equity. And you can also, So book value in this case intos book value is $77.6 billion rate. So this is the book value. And if you want to invest in a company, you can actually take this number and compare it to its market gap to see how far the company is actually trading at, right at the moment when you're looking at the current price of the stock or every share, right? So you wanted to compare that to the market gap to see like at what sort of premium the company is trading at. So right now, you can see that book value for Intel is 77 billion. So now let's go and click on summary here, you can see that the markets, the market cap for Intel is 230 billion. So if I go ahead and go take that market gap, so 230.34 divided by, let's go back to the financials here. Click on balance sheet and look at the book value. It's 77.6, let's say. So you can see it's about three times the premium, right? Which is not actually that bad. It's actually not that bad because you'll never, you'll never get, it's almost very rare for anyone to get the market cap of the market gap and the book value being the same when you want to invest in that company. Now, it does happen, but it's very rare From what I've seen so far. Also one last thing on the balance sheet to look out for, and that's long-term debt. So pay very close attention to this. You don't want this number to be very, very high. And also some companies out there with really good balance sheet don't even have long-term debt. So if you're ever trying to analyze financial statement for a publicly traded company and you look at the balance sheet and you can't see a long-term debt. That's a really, really good sign. Now, in a few minutes we'll perform some calculations with the long-term debt. But it's definitely something to keep your eyes on when you're analyzing the Balance Sheet financial statement, because this long-term debt, this is not something that the company has to deal with the next 12 months, so it will stay with the company for years to come. So it is important that this number doesn't get too big and the companies continuously paying down their debt. When going over the cashflow financial statement and analyzing the numbers always pay attention to the inflow and outflow of the money from and into the business, right? It's very important for you to understand where is the money going in? So how is the money coming from the outside into the business and the reasons behind it and also how is the cash or money flowing out of the business and the reasons and why's behind it. So it's very important for you to understand those things. And the way you actually can capture those things and understand them is good by going through the cashflow financial statements. So when you're looking at cash flow, always make sure that you're going through everything. You're understanding that the company is spending money to expand. So they are investing in themselves to grow and that's in capital expenditure. Make sure they're constantly investing the cash back to grow themselves or back to grow the business, right? You make sure they're actually spending money in paying down debt. So as we saw, Intel has a lot of dead and lot of long-term debt. So you do want to see the company spending cash to repay that debt because if you don't, then the debt will accumulate and then long-term it becomes a pretty big problem for the business. And you also want to see things like repurchasing stock program. So that's just simply if the company has a lot of cash and a very low debt, then you do wanna see them buying back shares because that's simply reduces that dilution amongst existing shareholders, right? So you do wanna make sure you're paying attention to those things on the cash flow statement. Now one calculation you can do and there's really no name for this is just it's the, it's the result is in time and a number of years. So one thing you can do is if you ever want to figure out or find out how much or sorry, how long it will take for a company to pay back is dead, is simply dividing the long-term debt by its free cashflow. And they'll give you the number of years in terms of how long you'll take. So for example, in Intel's case, over here, we have. So let's go and let's walk through the calculation ourselves here. So let's jump to the balance sheet here. Let's find the long-term debt. So here we got, let's, let's do it for the year 2019. So let's imagine right now is the end of 2019. So let's go down as the first column here. What is the long-term debt is 25. Crunch the numbers here. So 25308000 and then 000. So approximately 25.3 billion divided by now we've got to find the cash flow for year 2019. So let's jump into the cashflow statement. Go down. So the first column is TTM b1, this column. So if you go down to the free cashflow, it's 16 billion or approximately 17 billion. So let's, let's put the numbers in. So 16932000000, right? And then if you click equal, this is the number of years it will take until to use that free cash flow to pay down its debt completely. So in our case is approximately 1.5 years or 1.5 years. So that's actually not bad. That's really good because they'll take less than two years for Intel to pay down the debt if that's how they chose to spend their cashflow. So this is another calculation we can do at a very good one to understand where they stand financially. Because if you see a company and you know, all of a sudden you do this calculation and you realize I'll take 101520 years to pay down debt. That's probably something you don't want to get yourself involved it or you don't want to invest your money in. When it comes to fundamental analysis, there's one more metric that could be very valuable to us who as investors or to us who want to analyze the financials of the company. And you can't see that on the three financial statements. But in Yahoo Finance, if you click on this summary tool here, you can see it here, and that's PE ratio. Now P stands for price to earnings. And what is it? So price to earnings ratio or P ratio, is simply the relationship between the company's stock price relative to its earnings. So and the way it's calculated is that you can take simply the stock price. As of today, and divided by the earnings, our EPS, also known as earnings per share, right? So this is the earnings 5.44 or earnings per share, and this is the stock price. So let's go ahead and do that here. So you can see that the P ratio is already calculated for us is 9.95. But let's go ahead and put it into our calculator. So if you take the price here up top, so 54.16 divided by EPS, which is 5.44. You can see that we get 9.95 exactly what we expect here. So this is how you get the calculations for PE ratio. Now, P ratio again is just a metric that relates the two things together. So price to earnings. And typically it's a metric that is used to determine whether a company is overvalued, rightly valued or undervalued right? Now to give you a reference, the S and P 500 index, which is the, which is a collection of the largest, largest market cap, largest corporations, 500 corporations in the United States. It historically has a PE ratio of somewhere between 15 to 20, right? If you run the numbers back, historically has a number p ratio of 15 to 20. So if you are falling within that range, then that's good, right? But in general, the lower the PE ratio, the better of a value you are getting as an investor. Because the lower the PE ratio, it means that it is more on their value as opposed to the overvalued side, the higher the PE ratio, it means it's really overvalued. You know what a PE ratio is? I just want to visually explain the concept here. So as you can see here, the PE ratio is price divided by earnings, and we cover that earlier now, if the price goes up, right? So whatever you have over the division line here, if this thing goes up, then that means the price to earnings ratio will go up. And if the price to earnings ratio goes up, the company is moving towards the overvalue territory, right? And but instead, if the earnings of the company goes up, then the result of this division will become smaller. So if the number on the bottom is actually going higher, then this number will go lower, right? Make sense? So that's exactly what you do want to see from underlying business or a publicly traded company. You want for their earnings to go up, right? The more revenue they bring in, the more cash they bring in, the more earnings they'll have. Great. So you want that number going up, which consequently from this equation will bring the price to earnings ratio down. Now price to earnings ratio going down, it means that the company is actually in a really good state in terms of making profits. And also it could indicate a very, very You know, undervalued company right now sometimes you can also look at it this way. Sometimes unfortunate things happen, right? Unfortunately things happened to companies or industries that might affect the companies in that industry. And like a huge sell-off begins, right? If, if in bad news comes out for a company for whatever reason, then a sell-off begins. Everybody panics. People want to get out of that stock or company because they no longer believe in it. So the huge sell-off happens, right? And when a USA love happens, that starts to drive the price down right? Now again, on, on top of this equation, if this thing goes down, then it'll bring the top number going down. It'll bring the price to earnings ratio also down rate. So now again, the company, there could be other, there's, this is the other side to P ratio going down, right? So now the price will go down on a bad news and then drive the PE ratio down. So you want to understand the reason for the PE ratio going down, right? It's not always because the earnings is going up. Earnings going up is always a good thing. So if the PE ratio is going up, and for that reason that's actually really good, right? If the PE ratio is going down because there's a massive sell off due to some bad news. That's actually not a good sign because yes, the PE ratio will go down. Which hints to us as investors or people who are analyzing the company or the underlying business that this company is becoming undervalued. It doesn't necessarily mean that it's a good investment, right? If that news is really bad and it could eventually make the company goes bankrupt or hurt the company really bad and I'll take four years to recover. It probably doesn't make sense for us as investors to invest our money, right? So you have to understand is really important for you to understand why the PE ratio is actually going down. There are several important notes that I would like to cover about PE ratio. Now when you're looking at the Summary tab of Yahoo finance, this P ratio represented here, as you can see in the bracket, it says TTM, so that stands for trailing 12 month, right? So this represents the PE number for the last 12 months. So there are typically two PE ratios that you can use as matric rate. One is actually called trailing PE, which is exactly what this number represents. So the PE ratio for trailing 12 months, right? So trailing p And then the forward PE. Now the former B is out of scope for this course. But in general, what it means is that it's the projected PE ratio or number for the next 12 months. So where is the company or corporation going to be in the next 12 months in terms of price to earnings, right? So that's another metric that you can look up for a given corporation. But for our purposes here in the summary tab, we are currently looking at the trailing PE because you can see on the bracket it says trailing 12 month, right? So this number here. It's actually presenting the trailing PE for Intel. Great. Again, trailing 12 months means that the last 12 months or the last four quarters that company reported earnings for right? Now, if you're looking at this number here, first of all, if you see a number here and it's positive, that's a good thing, right? It means that the company is currently making profits, right? Also look at the EPS. Eps is pretty high rate, 5.44. That's a really good number. A lot of companies have a negative EPS or even like in the fractions like 0.40.7 or something like that, right? So four, well this is actually a really good number. Now, what does this PMI, right? This b, as I mentioned, is the relationship between the price and earnings right now, is this number good? Well, as we, if you recall, when we previously talked about this, the SMP 500 index, which is the collection of the largest 500 corporations in the United States, historically has a PE ratio of approximately 15 to 20. So if you want to keep the numbers rough, let's say between 15 to 20, right? So Intel has a BMI of ten. And if you remember, we said that lower the PE the better, right? And let's round this up to 1010. So if the SLB has a BMI of 15 to 20, let's say average of maybe 17 or 1810 is definitely lower than that. So this is actually really good, right? This is, having a PE of ten is actually really good now, and it's actually quite low rate. But remember one thing I mentioned is that you want to, if, whenever you see a really low P, You want to see that it's low for the right reasons and not the wrong reasons, right? Same with when you see a really high B you want to see is for the right reasons and not the wrong reasons. So you would have to do your research to see this below. Yes. And why, right? If the answer is yes, why is it so low, right? For the right reasons or the wrong reasons? Always remember that you have to do the research. So right now, this b of ten is actually pretty good for Intel, right? It fits in there. Very good category and low copy, right? The other thing you can do is you can also compare. Remember this is, this number is used as a reference right? On its own. It doesn't have that much meaning, right? In general, yes, the Lord, the PE, the better. As a rule of thumb and the equation and calculations we looked at. The lower the number, the better. So that's fine. But you can always, you should always compare a corporation or a company to other companies in the same industry, right? So Intel makes chips and processors, right? So that's the whole industry on its own. And there are tons of companies in that category, right? So one example is AMD or Advanced Micro Devices, right? Another example is NVDA, which makes GPUs for graphic arts rate. So those are all manufacturers of chips and processors. So one thing you can do is take a look at the PE ratio for AMD. You can take a look at the PE ratio for Nvidia rate and compare those numbers, the PE ratio of those companies to Intel. Then that will give you a good reference or perspective of how Intel is doing, right? If the average in that industry, for example, let's say the average, you look at this number and you say it's ten, well it's low rate. But then you look at the average of that industry and let's say the P happens to be five or six. Well then, now this number is not so low, it's actually not, it's much higher than his peers rate. So I'm just making this up, but let's say a AMD was actually five and until this ten, well, AMD has the lower PE ratio rate. So you have to, what I'm trying to say is that it's always good to compare to its competitor B0, to its peers to get a good reference or perspective of what that p0 means, right? And weight actually stands in that industry. Is it in the industries average is below the average. Is it above the average rate? The SMP 500 number we looked at is a very standard number, right? Looking at the industry like the chip maker industry would actually be better comparison as opposed to the S and P 500. So that's the 1 I actually wanted to highlight there. And another thing to pay attention to with the PE ratio is sometimes when you're looking at corporations or companies that you want to analyze is when you come to the summary tab of Yahoo Finance, you might actually not see a number here, right? Or you might see a number that's very, very high, right? Like maybe in the hundreds or even maybe thousands, right? So if you don't see a number here, right? Or you might see something like n a which says we're not applicable. It means that the company is currently not making any profits, right? So they're not profitable, right? And sometimes you might see an EPS of a negative number, right? So that means the company is not making profits and also not having a number here or having any, it means the company is not making profits right? Now. That's something to keep in mind. Sometimes companies, there are companies that you're looking at that have a really, really high PE, ratio rate. Again, as I mentioned, may be in the hundreds or thousands. Now the first thing that should trigger or turn on a light bulb in your mind is as to why the PE ratio is really high, right? Is, again, going back to what I said, is it for the right reasons or the wrong reasons? Now, if a stock is just overvalued and nothing fundamentally has changed about that, then they'll have a PE ratio. And the p really high PE ratio. Let's say everything stays in normal rate, like their debts don't really change that much year over year. Revenue just increases, but just by a tiny bed, nothing crazy or substantial. And next thing you know, the price goes really high, right? And if you remember that equation, if the price goes really high due to some catalyst news, that doesn't really change the fundamental of the company. Then the price will start to go up because people will start. I'm jumping into that stuff and stop buying rate for no good reason. Nothing fundamentally has changed, right? And this happens all the time in the stock market. So it is something to keep an eye out for, right? In that case, then the PE ratio will start to go higher, right? And that's probably an indicated that this stock is going to Lee overvalued and it's not the right time to buy it, right? Because you want to buy a stock that's probably, you know, fairly valued or very close to its fair value based on its fun financials and fundamentals, right? That's what this course is about, fundamental analysis. Now a company has a very high PE ratio. You have to ask yourself, is this a growth company, right? Because growth companies typically, the rule of thumb is they do have very high PE ratios, right? Why? Because they don't care about profits at the early stages of the company's lifecycle, right? They just want to grow and grow and grow and expand, right? So what they do is they sell their products and services, right? They make a lot of revenue. But instead of spending that revenue, they take that money and the reinjected back into the business to help it grow even faster. Right? Now, growth companies are typically defined as companies that have, they grow their revenue a really rapid rate at a very large percentage, right? So for example, any company that grows a revenue like 30%, 40, 50% percent, or even sometimes a 100% year over year or quarter over quarter. Those are considered growth companies, right? So if you see a really high P, And if you see, if you know that that company is going to be a growth company or you want to determine whether the company's growth company, you have to take a look at top-line, right? Look at the revenue and look at, look at quarter over quarter. Look at year over year and see how, what is the delta between each year or each quarter, right? How fast are they growing the revenue and by how much, right? That's very important. That's how you determine whether a company is growing. There is a growth company or not, right? So if you haven't, if you're a growth company and you have a really high PE, that's not necessarily a bad thing, right? It means you're not making a lot of profit, right? It means that the stock price is overvalued, but pretty soon it's going to based on the revenue growth, it's going to justify that price of the stock, right? It means that you'll come, you'll get your worth of your breakeven With the worth of your investment sooner than later, right? Now, as an example, let's take a look at a company called Tesla. Tesla is electric vehicle manufacturer rate and take a look at this. Their price is currently at around 440 years share their $400 billion market cap. Now take a look at this P ratio. This is the trailing PE for Tesla. Take a look at this. This is just crazy high. It's 10000139. This is just so high that it's just, it's ridiculous, right? Remember Intel's, It was ten. This is 100000139, right? Look at the EPS. So there is a number here and it's positive. So yes, the company is making profits, but very, very small profits, right? If you look at this P, this is, it just indicates that this really high. B indicates that this stock is very, or the company is very, very overvalued, right? It doesn't justify the 400 billion market cap evaluation, right? Or valuation. It means that this price is really high right now. It's very, very overvalued and it should be much below that, right? Because this, this number, that's what it tells us as people who are analyzing the financials of the company rate and determining whether this is valuable, undervalued or overvalued, right? And if it's a good investment for us or not. So this is what that number indicates now, is this, is this necessarily a bad thing? Well, not really until we find out, right? Remember, we have to know why is it so high, right? And we mentioned if it's a growth company, it might not necessarily be a bad thing because it is expected from growth companies, right? For us to find that out, we have to flip through the financials and take a look at the top line. So let's go ahead and do that. Okay, let's click on the financial SAP for Tesla. And let's then look at, take a look at their top line. So look at year 2016. They had $7 billion worth of revenue. Now, look at this 7 billion in 2016, Look at the jump in 2017. In one year, they went from 7 billion to 11.8 billion. That's just crazy, right? That's a massive amount. Let's do the calculations here. So let's go 11. Let's just skip the numbers rough, 11.7 divided by 7 billion. So they grew revenue by approximately 67%. Huge, huge numbers. So that indicates Tesla is a growth company, right? Just from looking at that, right, 67% revenue growth. That's just crazy. That's a really high number, and that is what a growth company produces right? Now let's take a look at the next thing. From 2017. They went from 11.7221.4 again, and not their huge jump year over year. Let's calculate that. So we go from 21.4 billion divided by 11.7 billion, we got almost the 83% growth in revenue. Just crazy. This number is just huge, right? Even typical growth companies are about 30-40 percent, maybe 50% is considered a growth company. This is a hypergrowth company. This is just crazy, right? I've even seen companies with over a 100% revenue growth, which is just insane, right? So this is actually good news for us. We can now determine that Tesla is a growth company, right? So that does somewhat justify the really high PE, right? Because if we go back to the summary now. What Tesla is going to do is going to take that revenue that we just saw in that top line. And it's going to put it back into the business to grow re, Tesla is accompany their manufacturing electric vehicles, but they're trying to, they're one of the leaders in this industry, the electric vehicle industry, right? And they have so much innovation, right? They're trying to make self-driving cars. They're trying to sell insurance. They're trying to have automated taxis where no one is driving the car. Our people can actually take other people's cars to and use them as taxis, right? There's so much happening with this company and there's so much innovation coming up for years, for years to come rate. So it does justify the high PE right? Also, tesla started with one manufacturing plant in the United States, in California. Now, they're going to build another, or they have already built another plant in Asia, in China, and they're going to build another one in Europe. And that's what they're doing with this revenue there. Just keep re-injecting it back into the business to help it grow, right? That's how they spend their money. That's why the profitability is so low at the moment, right? That's why this b0 is really high, right? This number is really low because now they don't have profits because everything they make, they use and they put it back into the business, right? They're going to have, they might have a fourth bland, may be somewhere in the world or maybe back in the United States. But all those things are coming, right? And all those things that they're using from the revenue to build, right? They will resolve it even higher growth rate. So at some point, Tesla's EPS will go higher, and it will actually, the PE ratio will go low, lower, and Tesla will grow into its $400, or sorry, 400 billion valuation, right? Yes, at this point that P is high, stock price is really high. That's what the p tells us, right? But looking at the revenue growth, it tells us that Tesla will, they soon or eventually grow into that valuation. That's why a lot of people justify this IPE and not treated as a red flag. So to summarize, when you're comparing Intel with Tesla, Tesla is actually a growth company rate. And you can see that the EPS for Intel was actually much higher than this, right? If you remember, it was 5.44, that P was ten. The PE for Tesla is 100000, and the EPS is very, very low. It's below one. So Intel isn't a growth company, it's a stable company. And again, one thing to keep in mind is that the more stable the companies become and the more established they become, it just gets harder and harder for them to grow rate because, or grow massively because it's just like most of the innovations have been done day as you innovate, you slowly start to run out of ideas in terms of creativity or the things you can actually do, maybe limited to technology or whatnot. And Intel is basically not a growth company at the moment. Looking at the financials and the top line, right, as we saw there, just growing revenue. By very slowly, right? Which is stable and it's fine for some investors who are looking for value investing. But Tesla is it growth company, right? So people who see a big feature and a future for the company and also this company has a lot of innovation ahead of it's all, each company will eventually slow down in terms of growth, the bigger they become, the store that growth will become rate. But at this point, Tesla or this corporation, Tesla has a lot of growth ahead of them before they see any slowdowns, right? So that's one thing to note. And the last thing I wanted to highlight is what we talked about briefly, which was the forward PE, right? So you're looking at the trailing PE and you're looking at this and you're saying, wow, this is really high, right? And for the right reasons, it is really high and you should be concerned right now. You also have to look into the future. How do you do that? So if you click on Statistics tab over here, you can see the trailing P, which was what we just looked at. Now, here is the place you can see the number four forward PE, right? Look at this forward PI 134. This is just a crazy amount of reduction, right? So this is saying, as of the last 12 month, Tesla's P is one hundred, one hundred and thirty nine. In the next 12 months is projected to go to a 134. So it's actually getting reduced by f thousand, right? This is just insane. That's how much lower Tesla will become. So this is coming back to what I was saying earlier. With the current revenue growth rate and sales rate rate, Tesla will slowly grow into its valuation, right? So it's still the next two of one, it's still not going to be ten, like as low as Intel was, right? But like going from a 10000139 to 134 is still a huge, huge, massive improvement, right? So this is another metric that is good for you to look at when you're trying to see if the price is overvalued or undervalued or just about the right amount. One last note on the EPS here. So the EPS that's being described in the summary section of the Yahoo Finance platform. This is the trailing 12 months. So this is the 5.44 is the for the EPS for the last four quarters that the company reported earnings for. Now, another place you can actually find this EPS if you want to track back and make some calculations for previous years or if you want to look at the historical data, if you click on financial statement and in the when we are in the income statement, if you just scroll down here, you can see that under net income or the bottom line here, there's some information about EPS as well. So if you want to just simple, basic EPS, This is where you will look in the income statement on the income statements, financial statements. So over here you can see that the EPS for the year of 2016, EPS was 2.1, then 2017 to 0.04. So that's went down a little bit. And then in year 2018, he went to 4.57. This is a huge jump, so it almost it actually more than doubled. So this is a really good sign. Company, was making a lot more profit in 2018 than it did in 2017. And then slight increase, which is good, which is still good in 2019. Right? And right now for the TTM as of right now, we don't have this number is not reported here because the year 2020 hasn't ended yet. So once the last once the corporation or the company releases the earnings for the last quarter in the beginning of 2021, this number would get filled with that EPS. You can also find EPS on the consolidated financial statements on the company's website, which we'll cover next in the next lecture. 9. Investor Relations: Now one last thing I would like to cover in this course is where you would actually go to find the official consolidated financial statements where a given Corporation. Now Yahoo Finance is a great platform, it's free and it's a great tool for you to get started looking at the financial statements. But as we previously mentioned, is the financials section, it does have a lot of good information and a lot of good data, but sometimes it's not completely up-to-date, or sometimes it just shows you the summary, so it shows you the total of everything. And you don't get a detailed breakdown view of say, the costs or the revenue or the expenses that the company has or the debt they might actually take on, right? So if you as an analyst or as an investor, if you wanted to get more insight into those things, the looking at the consolidated financial statement is actually a better place, right? Not, not to say that Yahoo finance is not a great tool. It is a great tool. And sometimes by just looking at the financial section of Yahoo Finance, you might get what you're looking for. But in case it's not, I want to teach you where to actually go to find those official financial statements for a given company, in this case, Intel, so that you can actually get the insight you need in order to make your decisions. Now, every major corporation out there has a website, right? I'll be very surprised if a company that's publicly traded on a stock exchange doesn't have as Website, at least a simple website, right? Every big corporation over there, online, on the internet has a website, and typically, every website has a section dedicated to investors. Now this is called the investors relations page, right? And most companies actually have that. So let's go ahead and take a look how we can find that. Okay, so very simple. Let's start by searching for the company. So in this case, Intel, you can google it if you like, and it's the first one in the result here. And now we're on Intel's page. Now, this I highly recommend going through the website, get if you're not familiar with what Intel does, or what they make in terms of products or what they offer in terms of services. This is a great place to look, right? You can look at a product support solutions. You can even look at the partners, right? Which companies are partnering up with Intel. And typically, if you are wanting to look or finding investors relations page, in my experience, it's always at the bottom of the company's website. So if you just scroll all the way to the bottom, there'll be somewhere in this section, right? Some companies are a little bit harder, but you just, I'm sure you can find it after a couple of minutes. But typically if you just scroll all the way to the bottom, there should be a section or a tab called investors relation. And in this case, we just found that. So Intel has made it very easy for us to find that, which is great. So if you click on investors relation, it should take us to the page that has a lot of information for people who want to find out about the company, right? So there's a lot of tabs in here, and I highly recommend going through these to actually get more insight about the company first before analyzing their financial statement, right. Because some of the terminology and some definition and some of the products will help you understand what some of those numbers mean, right? Like sales of chips or revenue of the chips or services they provide, and so on. So for example here about Intel. So if you hover over that, you can look at the overview of the company, what they do if you are interested to get to know their management team and the executive team, this is a good place, right? You have segments, news events, financial information, stock information, filings and reports. So all the filings they have to make with the SEC or the Security Committee, Security Exchange committee, and all the like. When a company actually reports earnings, they have to make those available to that committee, right. So every company has to file with them. You can look at the annual reports, quarterly reports, and a lot more information here, right? The board of directors and so on. So if you scroll down here, again, there's a lot of stuff here. So latest news, you can look at the news for the company rate. You can look at upcoming events, latest presentations, and latest quarterly results. Now, one thing I wanted to mention, so if you looking at the latest quarterly results, Let's click on this. So the latest quarterly the latest quarter that the company reported earnings for was the Q2 of 20-20, which is not too long ago. So let's go ahead and open that. Okay, so if we scroll down now, over here you can see the latest financial results, the results Q2 of 20-20 and the quarter ended in June 272020, right. One thing I wanted to show you, so over here there's a lot of information. So you can do earnings release, right? You can look at the high level information about the quarter. You can look at the presentation. They typically have a really good presentation that talks about how things went in terms of revenue and costs of revenue. And also sometimes the projected like what do we project for next quarter, or how much profit are we planning to make next quarter, right? This presentation is a very good place to actually take a look about financial information and the outlook of the company, right? You can actually listen to the earnings if you missed it while it was live. There's also ten q here. So ten q is the official report that contains the three financial statements and even more financial information for every quarter. So when you see ten q is the quarterly report for that company for the quarter that they just reported earnings were right. So let's get started here. Like I just want to show you something really quick. So if you click on earnings release, so let's open the PDF for that. They high-level information here. So you can see the summary is a really good actually think to start reading with. So second quarter revenue was 19.7 billion and it's telling us that it's 20% year over year. This is actually really good increase in revenue. So it's saying that this time last year, which is Q2 of 2019, compared to now. So one year, one year's time as Bass, we, revenue has gone up by 20%. So that's actually a really good big number. That's exactly what you want to see. Right, so that's a big jump and that's a good sign for Intel because you don't want to see the number going up, like revenue increasing by one or two or even 5%. Those are not big jumps, right? You want to see the company innovating and the revenue going up quite a bit. So over here you can see that the company grew 20%, right? You can actually see the second quarter earnings per share. So if you want to look at EPS in a different place, you can also find it here, right? Eps was 1.109 and it was up 20, 20%, 29% percent year over year. So this number is higher, almost 30% compared to Q2 of 2090, right? Very good information. And if you scroll down here, there's tons of again, tons of financial information. And like the business outlook rate talking about Q3 and the estimates, our projected estimates for Q3 can see the revenue, operating margin, tax rate, earnings per share rate. So you can see that these are the projected earnings per share for Q3. So really good thing to look at in terms of outlook. And then if you scroll down here, so here you can see the consolidated condensed statement of income rate. So this is the information you can see for income rate and you also see that side-by-side comparison, right. June, June 29, 27's, right. This is the six month and that this is the three month. And so a lot of good information here, right? Talking about, again, the numbers are in millions. So this is actually 3.3 billion, right? If you're reading that. So costs of sales, net revenue, all those things you saw in Yahoo Finance, but here there is a much better and more detailed breakdown of things, right? So if you go down here, if you scroll down, you can see a lot of good information. So balance sheet here rate. You can see, again the same thing as you saw in Yahoo Finance, but for example, in Yahoo Finance, I don't think I remember seeing this. I don't think there was a breakdown of inventories here. You can see that in Yahoo Finance, him, I just show you the total here. Write him. I just show you $8.9 billion in terms of inventories, right? But here its actually breaking it down into three categories. Raw materials, work in progress, finished goods. And you can see the number, each number individually for those categories. As, as if you were in Yahoo Finance, you might just see that one number. So if you're looking for something specific, these numbers might give you some insight, right? So again, greater detail. And this is talking about debt, right? And again, this debt is the breakdown. There's a lot of good breakdown here, right? So then going down here, we can actually see the cashflow financial statements, right? So you can see all three statements here. Now, this is just a quick thing I wanted to show you so you can see the three in here. So let's go back to the investors relation page. The next thing I would like to show you is the ten que reports. So ten q is the official quarterly report that the company has filed with the SEC. So over here, let's go ahead and open the PDF. Now, the ten q report contains a lot more information than just the three financial statements, right. So there's a ton of information, a ton of good information about the company is not just about the three. So if you're looking at the table of contents, there is a section. What that's exactly what we're looking for. The financial statements, consolidated financial state, and supplemental details. But there's also other stuff here like management discussion and analysis. This is a very important section if you're trying to analyze a company or look for insights or invest in that company. There's ton of him for information covered here, right? Other key information talks about risk factors, which again is very important to you as an investor or someone who's trying to analyze a company, right? But for us, there's a ton of good information that you can go through by yourself. And I highly encourage you to do that. But for us in this course, we actually concerned about these ones. Ten q has the official consolidated financial statements that we are looking for, so let's go ahead. So over here, let's click on this page. Should actually take us straight to there. So if you just scroll down, here we go. So consolidated statement of income. So over here you can see the income statement kind of like what we saw in Yahoo Finance, but with greater detail and finer breakdowns, right? And they also have a side-by-side comparison with the year 2019 for the six months ended and the three month and that right. One thing to note, the numbers are in millions or what you see here is actually a billion. So this is $19.7 billion, right? 19.7 million, it's 19.7 billion. Keep that in mind. So again, income statement, you can see that all the information about the income statement is here. If you scroll down, this is the continuation of the income statement. And if you go down here, so now we have the balance sheet, right? We're looking at the balance sheet and all the breakdown for the balance sheet here. And this is really nice because they're looking at, you're looking at the second coordinate, 20-20, and they're comparing it with the end of the fiscal year 2019, gives you gives you a good comparison there. So looking at the balance sheet, if you scroll down, now we're looking at the cash flow statement. And again, all the breakdowns and the comparison for the year to two years, right. So over here, again, this is a quarterly report. So this is a company that quarter here. So pay attention to this number, June 27, 20-20. And all the numbers in blue is what was released and reported as earnings for that quarter. And if you scroll down here, this is the all you can see. There's a ton of breakdown and ton of information about cash-flow financial statement. And you might not necessarily see all of these things provided in Yahoo Finance. You might just see that total number here, but you might not see some of these things, right? So it's very important to know where you can find that information if ya'll, finance is not the place for you. So now this is for the ten q. And the last thing I want to present is the ten K report, which is the annual reports. So when you hear ten K, it's referring to the annual report for the fiscal year that just previously ended, right. So in this case, the latest annual report here you can see for fiscal year ended in December 282019, and that's the annual report is called the ten K. So remember ten q is quarterly, ten gaze annual. Let's go ahead and open that up. Now this is a really big report and that there's a ton of information in here is the one year's worth of information, including the finite three financial statements. So if you scroll down here, you can see the table of contents. There's tons of strategy, sorry, tons of information here. So for example, review of the year, this strategy capital, right? Talking about products, this is the management. Again, this section is very important to you as an analyst or an investor. So I highly encourage you to go through some of these and read through them as it will give you a lot of insight, right? And then, same with the other key information, right, talks about sales and marketing, competition, intellectual property rights and licensing, patents and exact that risk factors properties, a ton of information rate. But the thing we're looking for here is the financial statement and supplemental detail. So that starts on page 66. So if you click on that, actually that took us to the top. So let's just look for it here. So now if you scroll down, you can see that here is the start of the financial statements. So just keep if we scroll down, keep scrolling down. Statement of income. So this is the Consolidated State of income, right? So this is where you actually see all the information for the income statement. Now, I really like what how they've done this because they put the previous years here. And this is good because when you're looking at imagined, you only had this column here, right? You only had the December 282019 column. When you're just looking at those numbers, you don't actually have a reference. You don't know if that number is good or bad. You can only tell if you're comparing it with the previous years, right? So over here, you can see that in 2017, the company made 62 billion. Again, remember these numbers are in millions rate. So what you see here is 62 billion, right? And then in 2018 they made 70 billion, almost 71 billion. So that's a really nice jump. That's almost like a $8 billion jump from 2017 to 2018. But then in 2018, day went from almost 70 or 71 to almost 72. So the growth wasn't actually that much. It was almost about, say, like maybe 1 billion. It wasn't that much, right? So when you have a huge jump from 20722018, but from 2018 to 2019, that's not a big jump. So you want to do want to keep your eye on that. And that's actually could become a red flag, right? The company is growth has gone down. You have to look into the reasons why that might have good reasons why the revenue isn't as big. So what I am trying to say is I really like this column by column comparison because you can use those previous years as reference when you're looking at the current numbers, right. And again, this is the ten K for the fiscal year ending in 2019. So this column is what we are interested in. These are the numbers. And if you scroll down, you can see again, this is the income statement, right? Note that detail and finer breakdown in D. So now we are looking at the consolidated balance sheet, right again, looking at previous years, which is a good side-by-side comparison view, right? Ton of breakdowns in here in terms of, you know, what the sections are. So talking about assets, liabilities, debt, right? The breakdown of the debt. And if you scroll down here now we're at the consolidated statement of cash flow. So this is the money going in and out. As we saw, same, same things that we see in Yahoo Finance, same cashflow statements, but with a lot more detail and a lot more finer breakdown, right? In case you need to see that, right, there is a ton of information here. So this is the ten K and just wanted to show you where you would go to actually find these things. So now let's go back. If you want to look at reports or whether it's annual reports or quarterly reports for previous years, more than just passed last year, like 23510 years ago. What you can do is if you click on financial results that it'll take you to this page, right? And as you can see, the current year is actually expanded here with this accordion. So right now we're looking at the 20-20 results. So you can see that Q2, you can look at the results here, and the ten q is available for Q2 and Q1, the ten q is available, right? You'll look at them. Q. You can look at the presentation, you can look at earnings release. They all have a very similar information about the numbers of Q1 and Q2 of 20-20, right? But let's go ahead and collapse that. And now you can see all the previous years, right? This is all the years that the company has made their reports available to. So we just went through the ten K for 2019, but let's say you wanted to look at something at 2060. So it will just expand this and all the information are here, right? Q_1, Q_1 of 2016, you can see the ten q. You can see the ten Q4, Q2, Q3, and Q4, which is, it's the year's end. So you would see the, you would actually see the ten K for it because the year has ended and then they will release the annual report. Right. So 2016. And this is how you would find for previous years. And as you can see, this goes back quite a bit rate. This goes back all the way to 2002. So you can, if you wanted to get a point of reference of how the company has progressed. Two thousand twenty two thousand two versus 2020, that's 18 years. So almost two decades worth of data. They'll tell you how this company has performed and how it has grew throughout the last 18 or 20 years, right? So this is how you would actually find that. So all in all, I just wanted to teach you where to go to find all the ten cubed and the ten K and all the financial information, the three financial statements for the quarter and also the annually. And this is where you would go to the investors page of the company's website. And I hope this was really helpful for you. 10. Final Words: I just wanted to take a moment to say, thank you for enrolling in the course. And I hope this course provided you with the necessary information and skill set so that you can actually analyze the three financial statements, the income statement, the balance sheet, and the cashflow statement. And I hope you can also buy now have learned what things to actually look for, what trends to look for, what patterns to look for, and how to actually make decisions and gain insight to make decisions on whether or not the company is going down a good path or a bad path, right? Whether the financials are improving and getting stronger or they're getting weaker. So I hope you guys now have the skills necessary to do that. And my recommendation is that you practice this by going through different look, going through the financial, the three financial statements for different companies and just practice. Always be sure to compare companies in the same industry, right, in the same segment and industry. And that should give you a very good practice so that when you're actually doing this, you'll just become faster and faster and faster. So again, thank you very much, and I hope this course taught you the necessary skill for analyzing these statements and I wish you the best and see you hope to see you in my next course.