hr: Money

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Keeping a close watch on how your company performs is a must for all investors. You can’t just close your eyes, cross your fingers and hope for the best.

One of the best ways to determine how well your company is performing in terms of revenue, liquidity status and credit rating is by looking into its SEC filings (http://www.sec.gov). The filings are usually categorized into 10Q and 10K. The 10Q is a quarterly report filed by the company that contains financial report and information about the nature and details of the business.

The 10K is similar to the 10Q, but is filed annually. Unlike the 10Q, which is more detailed, the 10K is a recap of all financial events that transpired during the fiscal year. The 10K further allows you to find out additional information regarding the amount of stock options awarded to company executives, plus a discussion of the business and marketplace scenario.

If you’re now looking at your company’s 10Q or 10K report, scroll down to where the balance sheet is. Look at total current assets and check it against total current liabilities.

If assets exceed liabilities, this means your company has a working capital, which can be used to finance day to day operations. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital.

However, if liabilities exceed assets, you have a working capital deficit, and your company may have to obtain more financing from investors and lenders to bridge this financial gap.

Another thing you must look into is the company’s credit rating, which indicates the company’s ability to obtain financing. The higher the credit rating, the more and better credit facilities the company can enjoy.

For companies with low credit rating — the exact opposite is true. A poor rating indicates a high risk of defaulting on a loan, leading to high interest rates, or the creditor’s refusal of a loan.

So this is basically what you need to do to check the health of your investment. You will learn a lot as you delve deeper into your portfolio.

It is best to obtain the services of a financial adviser when in doubt about certain decisions you are about to make. He will make a thorough assessment of your stocks as to where you’re hit the hardest and where you’re gaining the most.