Trading Software and Books Reviews

Analysing Company Accounts Review

Okay, there are some people out there who want to do more fundamental analysis than just look at the index of Roth’s book, Top Stocks 2004. Chances are though that you don’t know where to start. Well, Mr Roth has given you a good start. While you won’t finish the book as a CPA, you will certainly have a much greater understanding of how he, as a fundamental analyst, does what he does so well.

One of many challenges is seeing through all the marketing glitz that is used to embellish a company report. The lessons and insights in this book give you tools and help you to develop processes for slashing through the hype to the core issues, so you can decide whether the company is sound enough to invest some of your hard-earned money with.

The author also provides suggestions for portfolio monitoring, which gives even more value to the book, as it makes company analysis relevant to the reader.

This is the fourth edition of this book, suggesting that it is both a worthwhile book in its own right and that it is regularly updated to match the changes in company reporting practices and requirements.

While all the usual terms like EPS and PE ratios are discussed, Roth expands on their use, giving insight into their relevance and application. Although he comes out with ratios and comparisons that I had never heard of, I realised that they add to the clarity and reality obscured by the company spin-doctor’s marketing hype. The book is certainly worth an hour a night at your desk with a calculator for a month or so, as you internalise and apply the concepts Martin Roth presents.

This article was originally published in the Sep/Oct 07 issue of YourTradingEdge magazine (www.YTEmagazine.com). All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.

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