Thank you for the opportunity to help you with your question!
The basic four types of financial statements are:
1. Balance sheet.
2. income statement
4. statement of cash flow
There is no strict "correct" answer. You can make decent arguments
for all three. It really depends on what the goal is in analyzing a
company (are you trying to buy it? invest equity? buy its bonds?) But by
convention, I think generally it goes something like this:
1) Cash flow
3) Balance Sheet
Cash flow is probably the most important because it allows you to see
how readily a company can meet its debt and interest payments. A
company can have a strong P/L, but at the end of the day, if a lot of
the revenue generated is from accounts receivable, the company can still
fail to meet its debt obligation. "Cash is king".
P&L is important because it gives you an idea how profitable the
company is overall. Via P/L you can look at its margins and other ratios
to see how it does in terms of generating profit relative to other
players in the industry.
Balance sheet is probably the third statement you'd want to look at.
It's more of a "long-term" view, or track record of how the company is
Please let me know if you need any clarification for the doubts. I'm always happy to answer your questions. Looking forward to help you again. thank you. :)
Sep 18th, 2015
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