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● Relax. In our pursuit of financial independence and freedom, it’s inevitable that we’ll eventually look towards investing in order to grow our wealth. And since investing seems like a game which only people in the know can play, we decided to level the playing field by teaching you the really basic stuff in order to decide if a company or stock is worth investing in. In this first part of our series, a While having lunch (chicken rice) and thinking of which company I should use for my analysis, I thought: So for this exercise, I’ll be using a fictitious chicken rice company, – that has been in the chicken rice business for the past 10 years – to explain the basics of how to evaluate a company in simple, bite-sized terms. First, let’s look at the company’s An  shows a company’s income, expenses, as well as the profitability over a period of time. Think of it as a report card which investors like you and me can use to determine if the company is doing well. Here’s what Seedly Chicken Rice Limited’s income statement looks like: Feeling lost? Don’t worry, I’ll walk you through the definitions for some of the terms used in the above Income Statement. The  is the Price x Quantity and it is the . It’s basically how much the (Chinese for boss) of the chicken rice shop pockets from his business. Assuming that Seedly Chicken Rice sells 200 plates a day, at $4 a plate, and the stall is open 6 days a week. Running a business means that obviously, you’ll incur some expenses is the direct costs to produce the goods, sold. It is a variable cost which varies with the number of goods sold. Simply put, the more chicken rice you sell, the higher the cost of goods sold you will incur. It is the cost of the materials you need to make the chicken rice: Assuming that the cost of these items works out to be $1.50 per plate of chicken rice. is also another . is Don’t believe me? Here’s . The next step would be to compare the results against the income statement for 2019 to ! Also, i This is what Seedly Chicken Rice Limited’s income statement looks like for 2018 and 2019: Using these indicators, we can conclude that the Why not check out our community at  and participate in the lively discussion about stock investing there!