How to Read and Understand Quarterly Reports
The quarterly reports and financial statements indicate the business's quarterly development. To protect the interests of investors, SEBI (Securities and Exchange Board of India) requires every listed firm to produce quarterly reports.
Consequently, quarterly reports let investors analyze the performance of the organization. It also aids in making good investing selections. However, there are multiple aspects to understanding quarterly reports.
This blog has mentioned a tutorial for Financial Statements and a few key points to consider while analyzing Quarterly Reports.
What Is a Quarterly Report?
A summary or collection of unaudited financial information, such as balance sheets, income statements, and cash flow statements, is included in a Quarterly Report, which businesses publish every quarter or every three months.
These statements could also include year-to-date and comparative results in addition to quarterly numbers.
Reading & Understanding a Quarterly Financial Report
These are a few critical considerations for comprehending Quarterly Reports-
|
Particulars |
Meaning |
Indication |
|
Gross Sales |
Gross Sales determine the sum of all a company's product and service sales over time. |
A consistent increase in Gross Sales indicates growing demand and solid corporate health. |
|
Net Sales |
Net Sales are the corporation's total revenue, excluding any sales returns, allowances, and discounts. |
This is a reliable gauge of a company's health than gross revenues. |
|
Operating Income |
Operating Income is the revenue remaining after subtracting operational direct and indirect costs from sales revenue. |
It is an indicator of the business's profitability. |
|
Operating Profit |
Operating Profit is the amount of money a business makes after deducting its expenses, depreciation, and amortization for a specific accounting period. |
The Operating Profit demonstrates the management's effectiveness and the firm's current state. |
|
Margins |
The Margin is the discrepancy between a product's selling price and manufacturing cost. |
Margins help determine the financial safety of a company. |
|
Interest Expense |
The entire amount a firm spends on interest on its loans is known as Interest Expense. |
An increase in Interest Expenses is a sign that the company's debt has grown. |
|
Net Profit |
Net Profit is the actual profit after all working expenditures not included in the gross profit calculation have been paid. |
The profitability of a corporation increases with increased Net Profit. |
|
Earnings Per Share (EPS) |
The monetary worth of an organization's Earnings Per Outstanding share of common stock is known as Earnings Per Share. |
EPS is a fairly reliable gauge of a company's success. |
Where Are the Quarterly Results of a Company Available?
The Quarterly Results of a Company are available on-
-
BSE & NSE
All listed companies have to upload a copy of their results on the websites of the stock exchanges they are listed on.
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Company Websites
Many corporates also share QREC-related details on their websites in the Investor Relations section. A few of them also put all the conference call transcripts/recordings. These are gold mines for any curious investor.
(This is not a complete list of resources.)
Advantages of a Quarterly Report
Listed below are the significant benefits of Quarterly Reports-
- Quarterly Reports include context and background information that assists in understanding the company's performance metrics for the quarter under observation.
- Quarterly Reports aid the investor in gaining perspective and understanding the fundamental causes of any potential variations from performance or accomplishment targets.
- Quarterly Reports also aid investors in understanding the management's present outlook.
You may also want to know How to Read and Analyze the Profit and Loss Statement of a Company.
Conclusion
Finally, this was only a reference for learning different ideas and financial statements. One step in the investment process is understanding Quarterly Outcomes.
Although significant, it is not the be-all and end-all. For example, it is possible that a poor quarter will not warrant selling the shares.
Thus, the only indication for you to buy should not always be one Outstanding Quarter. Additional qualitative factors must be considered for buying/selling choices.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.