Day Trading Encyclopedia

Stock Market Fundamentals

Accounting Ratios

Accounting ratios are used to take seemingly complex financial statements and break them down into easy-to-use metrics that can be compared across companies.

Cash Flow Statements

Cash flow statements are used to help traders and investors understand how a company is using their free cash. These statements compare incoming cash flows to outgoing cash flows so traders can see the net cash flow for a period.

Income Statements

Income statements show how a company is doing from a sales and profitability perspective. These statements show revenues generated minus any expenses.

Balance Sheets

Balance sheets give traders and investors insight into a company’s current standing. These statements show a company’s current assets (such as cash and inventory) as well as their current liabilities (such as debt).