Company assets are considered one of the most important criteria that long term investors should study carefully before making investment decisions. The success of any company is based on its ability to convert these assets to profit, and once the company failed to do so that consider as a big failure.
Investors should investigate companies’ financial reports and see where is the company’s profit comes from. Once they found that the profit of the company is derived from its assets that means the company can make profit from its own assets which is good. On the other hand, once they found that there is no link between company’s profit and its assets then ignoring this company is the wise choice an investor should make.
There are so many companies that failed to make profits from their assets, even if their technologies are widely spread across the world, which make their stocks hit lowest prices of all times and not able to make new highs such as Snapchat.
If you studied the snapchat balance sheet you will see that that the company has more assets as well as it’s debt-free.But even though it fails to make a profit from these assets as you can see in its earnings report which made it hard for its stock to reach at least the IPO prices which was (28 $). But once the company knows how to make a profit from its own assets its stock will go up and make new highs that lead to an increase in the company’s market value.
Long term investors should always look for details in companies financial reports specially companies’ balance sheet which needed to be studied carefully, because the last thing that investors need to see their-self are holding an investment (stocks) in company that generated its profit by cutting costs, and let go of its employee. Instead of that, investors need to hold and invest in those companies which treated employees as its main assets and generate its profit from its own assets.