← Back to Learn Investing

How to Actually Compare Two Companies' Financial Statements

Reading Financial Statements • Beginner Investing • 7 min

When you put two companies' income statements next to each other and look at the raw dollar figures, it might seem like you're doing real analysis. But most of the time, you're not. A large company will usually have higher numbers than a small one. That doesn't really tell you which business is doing better. The solution is to normalize the data: focus on margins and ratios, like gross margin %, revenue growth %,…

3 of 3 free lessons used

Create a free account to keep reading

You have read your 3 free lessons. Making an account is free and gives you 3 more straight away - plus your progress, streak and quiz scores saved as you go.

Learning through your school? Join your class - school students get everything, at no personal cost.