Fundamental investing is treating your money as a mini version of an earning you. Applying the same “what are you going to do when you grow up” that excessively defines our life planning. Fundamental investing is getting your money a job.
The same concepts of Financial Yoga for an individual real person apply to the legal person that is a business... and to your money that invests in businesses. Endurance, resilience, and creativity give shape and form to ideas.
The Balance Sheet of a company provides endurance. The rock on which they do whatever they do. A strong Balance Sheet allows a company to survive. It buys time. To invest in research and development. To properly maintain what they have.
The Cash Flow Statement indicates resilience. It breaks down how cash is used for operating, investing, and financing activities. Can the company find the liquid cash it needs, as and when it needs it? Is there the money available to do what needs doing?
The Income Statement is a picture of the bottom-line creativity. Is what the company is doing costing more than what it is producing? Is spending under control? Is the business sustainable?
Studying the Financial Statements of a business is similar to the financial planning of an individual. Money is more suited to the hard solvency, liquidity, and profitability ratios that weigh, measure, compare, and judge containers for wealth creation.
The more time and space it is given to grow, the more money as a mini-you can free real-you from those constraints.
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