文档介绍：Financial Statements,
CHAPTER 2 Cash Flow, and Taxes
SOURCE: © Bill O’Connell/Black Star
4
DOING YOUR
HOMEWORK
WITH FINANCIAL
STATEMENTS $
uppose you are a small investor who knows a The trick is to find a product that will boom, yet
S little about finance and accounting. Could you whose manufacturer’s stock is undervalued. If this
compete essfully against large institutional sounds too easy, you are right. Lynch argues that once
investors with armies of analysts, high-powered you have discovered a good product, there is still much
computers, and state-of-the-art trading strategies? homework to be done. This bing through
The answer, according to one Wall Street legend, is a the vast amount of financial information that is
resounding yes! Peter Lynch, who had an outstanding regularly provided panies. It also requires taking
track record as manager of the $10 billion Fidelity a closer and more critical look at how pany
Magellan fund and then went on to e the best- conducts its business — Lynch refers to this as “kicking
selling author of One Up on Wall Street and Beating the the tires.”
Street, has long argued that small investors can beat To illustrate his point, Lynch relates his experience
the market by mon sense and information with Dunkin’ Donuts. As a consumer, Lynch was
available to all of us as we go about our day-to-day impressed with the quality of the product. This
lives. impression led him to take a closer look at the
For example, a college student may be more adept pany’s financial statements and operations. He liked
scouting out the new and interesting products that will what he saw, and Dunkin’ Donuts became one of the
e tomorrow’s ess stories than is an best investments in his portfolio.
investment banker who works 75 hours a week in a New The next two chapters discuss what financial
York office. Parents of young children are likely to know statements are and how they are analyzed. Once you
which baby foods will eed, or wh