Hello friends, today I bring an induction to INFORMATION AND FINANCIAL EDUCATION. The "fear of losing" (FOMO) is the main reason why many people shop on top of a price rise. Many people will never buy crypto until they hear that the price has skyrocketed.
In doing so, they enrich SMART INVESTORS rather than themselves, and spending their dollars in the throat of SMART INVESTORS who are more than happy and quick enough to grab them. Talking about FINANCIAL DATA is a very interesting topic that will add to your training as an investor.
Well don't be discouraged :) There are plenty of alternative crypto currencies that are solid with good development progress, smart business growth strategies and most of all solid foundations and a great team. Be polite, avoid (excessive) greed, be bold, be patient, HODL.

Of the over 2000 altcoins on the market, you only need to be right about a few altcoins to get the kind of profit you already know you want. In fact, only a small percentage of the market is taken by assets like these, so getting these few tokens correctly will be more than enough for you to hit big. To your Technical Analysis you will have to add FINANCIAL DATA (fundamental analysis).

What is financial data?
Financial data is what investors use to analyze the economic and financial health of a company. This is how they decide whether a stock is overvalued or undervalued. This type of work is often called fundamental analysis.

Financial data is derived from a company's income statement, balance sheet, and cash flow. Investors use this data to compare companies, create indices (price / earnings ratio, equity debt, etc.) and make informed decisions about a specific investment.



In this series of publications we will talk about:

Income statement: information about the income, costs, gains and losses of a company over a period of time. So you can see more about the profitability of a company.

Balance sheet: the assets, liabilities and equity of a company. The balance sheet is how you value the capital structure of a company.


Cash flow: the cash that enters and leaves a company at a specific time. a company's free cash flow and its cash from specific activities.

Ratios: the valuation of a specific company using financial ratios. price-earnings, sales-price and book-value ratios.

Financial data can be used for different time periods, including the fiscal year (Annual), the quarter (Quarterly) or the last twelve months (TTM). Some companies do not have quarterly data due to details of reports in different countries or if the company is new it has not had an official quarterly or annual report.

Don't talk about a super indicator or a super strategy that will make you richer than Elon Musk and Richard Branson together. Learning is the best way to avoid falling for scams, patience and persistence are the characteristics that differentiate the professional from the hobbyist. Everything that is big today has started small. Remember that whoever does not honor small things is not worthy of great things. You only lose if you quit.

Today we will talk about how to analyze the income statements and income statements of a COMPANY

Research and development (R&D)

What is research and development?
Research and Development represents all the direct and indirect costs associated with the creation and development of new processes, applications and products. Research and development shows how much money a company spends on innovation.

Why is research and development important?
Research and Development plays an important role in showing how much money a company spends to innovate. It can also show how focused a company is on its future, revealing the amount of money spent on new processes, applications, and products.

How is research and development calculated?
It is calculated by including the following expenses:

software
Software amortization
Design and development
Excludes:

Customer or government sponsored research
For oil, gas, coal, drilling and mining companies, purchase of mining rights
Engineering expenses
Government, customer or other corporation contributions to the company's research and development expenses are excluded if the amount is available

Total operating expenses

What are total operating expenses?
Total operating expenses are expenses that a business incurs for the things that are required to run the business on a day-to-day basis. Operating expenses include rent, equipment, inventory costs, marketing, labor costs, insurance, fees, and funds allocated to research and development.

Why are total operating expenses important?
Operating expenses reveal significant insights into company management and costs. A thorough study of operating expenses can provide investors with a better understanding of the amount of money and flexibility that a company must manage on a day-to-day basis.

Why may total operating expenses differ from other sources?
Different sources may show different numbers for total operating expenses because those sources may count it only as general and administrative expenses. In other words, they do not include the cost of goods sold as an operating expense.

How are total operating expenses calculated?
Total operating expenses are the sum of selling, general and administrative expenses, total and cost of goods sold.

What is net income?

Net income shows how much money a business makes after expenses. Net income represents the amount of money a company earns after all operating expenses, interest, taxes and dividends on preferred shares have been paid. If the net income is negative, it means that a company spent more money than it earned. In other words, they lost money.

Why is net income important?
Net income shows investors whether a company is profitable or not. When a company can earn more money than it spends, its net income is positive. These benefits can potentially be distributed to shareholders through dividends, repurchases or investments in the company. However, it is important to remember that companies use different methods to determine Net Income depending on their location and earnings report.

Gross profit

What is gross profit?
Gross profit is the profit the business receives after deducting the costs associated with selling its products, for example, manufacturing costs. Generally indicated in the income statement before the transfer of selling, general and administrative expenses.

Why is gross profit important?
Gross profit is important because it reflects a company's core profitability and overhead, while illustrating the financial success of a product or service.

How is gross profit calculated?
Gross profit is calculated by subtracting the cost of goods sold from total income.

Why are there no gross profits for some companies?
If a company is classified as Insurance or Bank, the gross profit will not be available due to its calculation methodology. These companies will have no cost of goods sold, which is used in the calculation.

Income before taxes

What is pre-tax income?
Pre-tax income is a company's income after deducting all operating and non-operating expenses, but before deducting income taxes.

What is pre-tax income used for?
In some cases, pre-tax income is a more indicative measure of a company's financial well-being than net income. Tax deductions depend on a large number of factors that can change over time. Therefore, income before taxes is a clearer and more consistent metric, as it eliminates inconsistent differences caused by tax differences for a particular period.

How is pre-tax income calculated?
Income before taxes is the sum of operating income and non-operating income.

What do taxes represent?
Taxes represent all income taxes collected on a company's income by federal, state and / or foreign governments.

Taxes consist of:

Federal income taxes;
State income taxes;
Foreign income taxes;
Charges in lieu of income taxes;
Charges equivalent to the investment tax credit;
Income tax on dividends or earnings of unconsolidated subsidiaries or minority interests, if reported before taxes; and
Deferred taxes.

Earnings before interest, taxes, depreciation and amortization (EBITDA)

What is EBITDA?
EBITDA is a measure used to measure the operating performance of a company. In some cases, it is used as an alternative to gross profit or net income because it shows a clear picture of a company's earnings without taking into account taxes or other accounting related estimates.

EBITDA represents profit before:

Interest - expenses caused by interest rates
Taxes: expenses caused by tax rates
Depreciation and amortization: non-monetary expenses related to the gradual decrease in the value of a company's tangible and intangible assets over time.
Why is EBITDA important?
EBITDA helps compare profitability between companies and industries by eliminating the impacts of financial, accounting and government factors. It gives a clear picture of a company's income.

How is EBITDA calculated?
EBITDA is calculated by taking total revenue and subtracting costs for goods sold, selling, general and administrative expenses, other operating expenses, and then adding depreciation and amortization.

Why is there no EBITDA for some companies?
If a company is classified as Insurance or Bank, EBITDA will not be available due to its calculation methodology. These companies will not have costs of goods sold, sales and general and administrative expenses, which are necessary in the calculation.

Cost of Goods Sold (COGS)

What is the cost of the goods sold?
The cost of goods sold shows the amount of money a company spends to produce or manufacture the goods they sell. This includes the cost of materials, labor, and depreciation and amortization. Does not include indirect costs such as sales and personnel.

Why is the cost of goods sold important?
Calculating the cost of goods sold helps investors assess a company's margins and economies of scale. It shows how much a company spends to produce the product or service it sells.

Other costs of goods sold (Other COGS)
What are other COGS?
Other COGS represent direct production costs and / or costs of services rendered, excluding depreciation and amortization, which are incurred in the income generation process during the period.

Total revenue (sales)

What is total income?
Total revenue, also called sales, is revenue derived from the product or service that a business sells. Total revenue is an important metric that shows how much money a business generates by selling its goods or services over a specified period of time.

Why is total income important?
While revenue doesn't reveal much about a company's profitability, it does show how fast a company is growing in terms of sales growth. Also, income is an important metric that helps investors calculate things like net income and EBITDA.

How are total revenues calculated?
Total income is calculated by multiplying the number of goods and / or services sold by the price of those goods or services.

Depreciation and amortization

What are depreciation and amortization?
Depreciation and amortization represent the total periodic allocation of capitalized costs, belonging to property, plant and equipment, natural resources and intangible assets. This includes capital gains and deferred charges to the income statement throughout their financially useful lives.

They include:

Depreciation;
Amortization of intangibles;
Amortization of deferred charges.

Operating expenses (excluding COGS)

What are operating expenses (excluding COGS)?
Operating Expenses (excluding COGS) represents the expenses a company incurs through its normal business operations, but excludes the costs of goods sold. The latter is already included in gross profit.

How are operating expenses calculated (excluding COGS)?
Operating expenses (excluding COGS) is the sum of selling, general and administrative expenses, total and other operating expenses.

What is basic EPS?
Earnings per share is the amount of earnings per share of issued ordinary shares. When companies report financial results, earnings per share is one of the most commonly measured metrics.

It is worth noting that the basic EPS is a rough measure of a company's earnings per common share. This metric is suitable for companies with a simple capital structure. Basic earnings per share do not take into account the dilution impact of convertible securities, which is important when analyzing the earnings of companies with more complex capital structures.

How is the basic EPS calculated?
The basic EPS is calculated based on the average number of ordinary shares of the last 12 months. This applies to American companies. For non-US companies, the average number of common shares for the prior fiscal year is used.

Selling, general and administrative expenses, Total (Total SG&A)

What does SG&A mean?
Selling, general and administrative expenses represent expenses that are not directly related to the production process of a company. Instead, they represent costs related to sales, general and administrative functions that keep the company running internally. General selling, general and administrative expenses also include research and development costs.

Selling, general and administrative expenses, others (general and administrative expenses, others)

What does SG&A mean?
Selling, general and administrative expenses represent expenses that are not directly related to a company's production process, but rather represent costs related to sales, general and administrative functions that keep a company running. Selling, general and administrative expenses also include research and development costs, while other general and administrative expenses exclude research and development costs.

What are other operating expenses?
Other operating expenses represent other operating expenses and reversals in addition to selling, general and administrative expenses, total.

How are selling, general and administrative expenses calculated?
SG&A, Others is calculated by finding the difference between Total SG&A and Research and Development.

Diluted earnings per share (diluted EPS)

What is diluted EPS?
EPS stands for earnings per share. Investors use EPS to measure how much money a company makes for each outstanding share it has. Diluted EPS is slightly different in that it measures a company's earnings per share if all convertible securities (such as preferred stocks, convertible debt instruments, stock options, and warrants) were used to calculate the metric.

Note: If a publicly registered company has more than one type of share in its capital structure, it must provide information related to diluted and basic EPS.

Why is diluted EPS important?
Diluted earnings per share provide a picture of the true shareholder base and how a company's earnings are distributed. Diluted EPS is an important metric for shareholders because it determines the benefit that shareholders will receive in a scenario that includes all share values ​​preferred to stock options and warrants.

How is diluted EPS calculated?
Diluted EPS is calculated in a slightly more complicated way than a simple EPS calculation. The exact formula is net income less preferred dividends, which is then divided by the weighted average number of shares outstanding plus all options, warrants and convertible shares.

Non-operating income, total

What is non-operating income / expense?
Non-operating income / expense represents income from activities that are not critical to a company's business.

How is non-operating income calculated?
Total non-operating income is the sum of interest expense, net of capitalized interest, non-operating income, excl. Interest expenses and unusual expenses.

What is non-operating interest income?

Non-operating interest income represents income generated by investments that generate interest not related to the company's operating activities.

Interest on savings; and
Interest on investment.

What is non-operating income, excl. Interest expenses?
Non-operating income, excl. Interest expense represents all non-operating income / expense, plus unusual expenses and interest expense.

How is non-operating income, excl. Interest expense calculated?
This is calculated as Non-operating interest income plus Equity before income tax plus Other income / expenses.

Interest expense, net of capitalized interest

What is interest expense, net of capitalized interest?
Interest expense is a non-operating expense shown in the income statement. Represents interest payable on loans.

How is interest expense calculated, net of capitalized interest?
This is calculated as interest expense on debt less capitalized interest.

What is interest expense on debt?
Interest expense on debt represents the service charge for the use of capital before capitalizing the interest reduction. If interest expense is reported net of interest income, and interest income cannot be found, the net figure is displayed.

* Short-term debt interest expense; and
* Interest expense on long-term debt and capitalized lease obligations.

Other income / expenses

What is other income / expense?
Other income / expense represents other non-operating income, excluding interest expense in addition to non-operating interest income and pre-tax equity of earnings.

It includes:

*Gain / loss on disposal of assets
*Non-operating dividend income
*Currency transactions
*Monetary correction
*Discontinued operations - before tax
*Foreign currency translation gain / loss
*Reserve for funds used during construction, if not related to interest (only utility companies)
*Gain on sale of investments (other financial companies only)

Pre-tax equity on earnings

What is pre-tax equity on earnings?
Equity in pre-tax earnings represents a company's proportional share in the net income of investee companies, accounted for using the equity method and reported before income tax.

Dilution adjustment.

What is the dilution adjustment?
The dilution adjustment represents the maximum possible reduction in income for all convertible securities, such as preferred shares, convertible debt instruments, stock options and warrants, when used to calculate net income.

Preferred Dividends

What are preferred dividends?
These represent actual cash dividend payments on preferred shares or provisions for preferred dividends, if they are in default. It also includes the accumulation of preferred shares. If a company has preferred ESOP shares, the dividend will be shown net of tax benefit.

Diluted net income available to common shareholders

What is diluted net income available to common shareholders?
Diluted net income represents net income that is adjusted by dilution adjustment for the calculation of diluted EPS. Diluted net income involves the conversion of all convertible preferred shares and debts, which means that net income will be adjusted by not paying any interest expense or preferred dividends.

How is the diluted net income available to common shareholders calculated?
Net Income Available for Fully Diluted Common EPS is calculated as Net Income plus Dilution Adjustment less Preferred Dividends.

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