“If we avoid the losers, the winners will take care of themselves.” Howard Marks
Before investing our hard earned money in any stock, and thinking about how much we could potentially earn in an investment, we should first think about the potential downside of it. The good news is that we can easily spot companies that may be risky by just looking at their financial report.
Here are the 7 red flags that all investors should be able to spot when looking at a company’s financial health.
1. Declining Earnings
The business environment is full of uncertainties and competition. Companies may at times face challenges that cause declines in quarterly results, such as oil price fluctuations, currency fluctuations and economic slowdown.
However, investors should beware when the problem persists and companies consistently report declining profits and margins over a substantial period. It could mean the company is losing