Analytical Review 101 – Part I

Before we start, I would like to quote Steven Covey, from his book “The Seven Habits of Highly Effective People”:

BEGIN WITH THE END IN MIND!

So, you should ask yourself: What is the end product of my efforts to calculate these financial ratios and performing analytical reviews?

Well, it should look similar to the financial dashboard above!

In order to analyze and assess companies' quantitatively; we need to construct financial dashboards to make sense of all the information contained in the annual audited financial statements. We will be attempting to construct the above dashboard to help us assess whether the company is worth investing based on its’ current market share price.

The information contained in the financial dashboard above is based on the Annual Audited Financial Statements of Nestlé’ (Malaysia) Berhad, downloaded from the Bursa Malaysia website.

For those of you interested in learning about the construction of the financial dashboards and performing analytical reviews, kindly download the Annual Report for Nestlé’ (Malaysia) Berhad for the financial year ended 31 December 2003 to 2007. All the analytical reviews and financial ratios calculated will be based on Nestlé’s audited financial statements. The link to the Bursa Malaysia is available on my Investment Resources Link section.

Please go through the financial dashboard above carefully. I will be reviewing each financial ratios in detail, in my subsequent posts so that we can make sense of the information in the financial dashboard.