Determining our patients' health is something we can do quite quickly, in part, because we've learned how. The other part is that we put forth the effort to do so. Consider reviewing the financial statements of a company equivalent to performing an annual exam on a patient. You can get a distinct idea of how healthy the company by examining the reports. They are your EKG, CBC, CMP, and physical exam. Always look at the financial statements to understanding the company's current health, determine the prognosis, and develop a plan to fix the issues.

The first report I recommend looking at is the statement of cash flows. This report is incredibly powerful and will quickly show you what is happening to the cash of the company. Cash is the lifeblood of any company. Its flow will identify what's good and bad about the company. If you notice more cash is flowing out of the company than what is flowing into the company, the cash flow is negative, and that's bad. If the cash flow remains...

If you are looking to raise capital, borrow money, sell your business, or buy another business, you will need to determine the value of your company. The value of any business goes beyond the bottom line. To help you determine the value of a business, consider the following factors.

Revenue

First and foremost, the value of a company is determined by the financial success it experiences. Things to look at are the revenue or sales of the company and the net profit. However, if you want to see if the company is good at doing its core function, examine the EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization. This number examines the cash that is generated by its core business function. The issue with looking at the bottom line, the net profit, is that it includes financing decisions the firm made and can falsely elevate a profit. EBITDA should grow over time as well. If you see it shrinking, figure out why. Is it a market condition, an internal operations issue, or...