No. of Recommendations: 2
It seems that the term "strong balance sheet" is somewhat subjective in nature and requires the inter-relationship of all the financial statements and a better than average knowledge the company and its sector.

This is true, but don't let it stop you. I recommend choosing a company you like, or are familiar with, even just a place you like to shop.

Read their 10-Ks and 10-Qs:

Start with the most recent 10-K (there's a lot more detail and background in those, than in the quarterlies). Eventually some things will become clear, and other questions will arise. Re-reading with these questions in mind (and using full-text search) helps a lot.

The other thing I'd recommend is to think of your own personal balance sheet. Without getting into accounting arcana, you have a common sense, gut feel for what comprises a "good" b/s. Businesses are more complex, but the same fundamentals apply. Take in more cash than you spend, don't run out of liquidity.

Hope this helps.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.