Investor in Colombo share market should have a clear idea that your companies make profit annually and capital gain and deviance take from those companies. Financial analysis is a necessary analysis that all investors in Colombo share market to do and you have a clear understanding on financial status of your company. Every investor should have a financial knowledge to analysis the company which they invested. Financial analysis is done by the financial expert in the industry, you need not to become a account or financial expert to have a basic financial health of your company and this can be done by some simple methods. From these methods you can get a good idea on financial status of your company  at Colombo share market and you can get investment decision based on you financial analysis.

The main document which indicate companies financial status is “Balance Sheet”  and this document shows how the assets and liabilities balances in that company.

What are assets

There are two types of assets, fixed assets and Movable assets. Lands, Buildings, Factories.. Etc. are fall in to fixed assets and these type of assets are not much focused to sell at once. Bank Loans, Capital money and company investments are fall in to mobile assets.

What are Liability

Liability is simply a debt from company to Share holders and others. Loans which taken by holding company shares  are fall under fixed liabilities and  cash advance, debts to suppliers, goods taken by loans, Taxes, Pensions funds and Deviance are fall under mobile liability. Debt to Equity ratio is also and important feature of financial health of company.

Profitability of Company

It is necessary to check the companies profitability have a good idea on financial health. The ration between Companies cost and sale are the most considerable factors of this analysis. This ratio is also known as Return on Sales.

Return on Equity (ROE)

If company able to get more return by the capital collected by Colombo share market company Initial Public Opening (IPO), That shows the efficiency and well management of that perfectible company. Return show in company’s annual report as percentage. For example for the year of 2013 and 2014 ROE of Texured Jersy Lanka Pvt Ltd is 19.02%. This ROE can also get Negative value and the negative value shows minus return and this is not a good indicator for a company. Those who are focusing on long-term investment must go at least the company which got 5% of ROE. If any company able to get 20% or 30% that is a very attractive for the company and for the investor. It is vital to check ROE from previous two years and do anticipated perdition on future ROE is also a good indicator to find the efficiency of any company at Colombo share market .