Question:
I usually choose the company by their financial report when I investment the penny stock market but I am not fully understand the statement. I checked the debt, Account payable,net income. What is the most important item if you check the statements?
Answer:
Cash flow is the key metric that most investors look at because it's difficult to manipulate. You should also figure out how the company spends its money and how it makes it. Penny stocks are hugely risky.
Before worrying about analysis of a financial statement in detail, I suggest you read "Common Stocks and Uncommon Profits", by Philip Fisher. (His methods are used by Warren Buffett.)
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