Appendix IV: Balance Sheet

Introduction to Fundamental Stock Research

These are the exercises to go along with Chapter IV, on the balance sheet:

  1. Find the balance sheet of the company you’re interested in. Switch between quarterly and yearly balance sheets.
  2. Have total assets increased or decreased over time? What about liabilities?
  3. Find long term debt. Has it increased or decreased over time?
  4. Calculate debt/equity (total debt divided by stockholders’ equity). Then, find the debt/equity ratio in the Table. Does the number you calculated match the ratio in the Table after rounding? It should!
  5. Find the company’s Morningstar grade for Financial Health. Does this grade make sense to you based on what you have learned about the company’s financial health through these exercises?
  6. Do you see changes in any of the balance sheet metrics over time that lead you to questions about the company’s business and operations? What are your questions?

Here is where you can find all the information you need to complete the exercises.

Find a Company’s Balance Sheet

Once you have selected a stock, you will notice that it loads in the table and the Insight panel (on the right hand side of your SR screen). Navigate to the Statements tab and find the balance sheet among the accordion menus. Toggle between the quarterly and yearly statements using the button shown below.

balance sheet

Tip: In the Statements tab, mousing over the graph icon will give you a very quick glance at the overall trend for the metric, as shown below.

balance sheet

Find the Debt/Equity Ratio

This ratio can be found in multiple places.

Table: The easiest way to find the Debt/Equity ratio is in the Table. Open the “Balance Sheet” View and by default the column should be present. Or, use the ‘Add Column’ feature to add it to any view.

sd column

Remember, in the Table you can click the arrow to the left of the Ticker name in order to open historical data to see how the ratio has changed over time.

Insight panel, Detail tab: If you have a Premium membership to Stock Rover, the Debt/Equity ratio can also be found in the Detail tab of the Insight panel, under the “Financial Health” section, shown below.

detail tab

Find the Morningstar Grade for Financial Health

There are multiple places where you can find Morningstar grades. These grades are based on Morningstar’s proprietary formula. To see what factors go into each grade, go here.

Insight panel, Summary tab: You can find all Morningstar grades for a stock in the Summary tab of the Insight panel.

summary tab

Table: Morningstar grades are also available in the Table in the “Grades” View.

grades

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