In my previous blog post, we discussed on economic moats and why it is important for us to identify which industry the company belongs to. If you have not read that post, you can read it here: How to pick stocks (Part 1) – Economic Moats To know if a company is doing well in that industry, we can look at various metrics and financial ratios to give us a clearer view. This will give us a confirmation that it has a strong economic moat. How to know if a company is generating profits? Financial statements are important in our analysis of a company. It reports on the current health of the company such as how much revenue it is generating, how much money it is spending, how much debt it has, how much cash it has etc. There are basically 3 types of financial statements we see in a ......