tag:blogger.com,1999:blog-286438502007-07-21T10:04:09.866-07:00MichaelBlogger1125tag:blogger.com,1999:blog-28643850.post-1148447043738483612006-05-23T22:02:00.000-07:002006-05-24T01:53:23.813-07:00To judge the financial strength of a company, ask yourself the following questions:<br /><br />1. Are the company's assets greater in value than they were three months ago, a year ago, or two years ago? Compare current asset size to the most recent two years to make sure that the company is growing in size and financial strength.<br /><br />2. How do the individual items compare with prior periods? Some particular assets that you should take note of are cash, inventory, and accounts receivable.<br /><br />3. Are liabilities such as accounts payable and debt about the same or lower or higher compared to prior periods? Are they growing at a similar, faster, or slower rate than the company's assets? Remember that debt that rises faster and higher than items on the other side of the balance sheet is a warning sign of pending financial problems.<br /><br />4. Is the company's net worth or equity greater than the previous year? And is that year greater than the year before? In a healthy company, the net worth should be constantly rising. As a general rule, net worth should be at least 10 percent higher than the previous year.Michael