Hello! Yes I hear where you are coming from on this, I'll just share about some thoughts I have, some pros and cons of historical information.
Financial information may be historical, but then they show you how the company can performed before. This may be an indicator of how the company will perform in the future since it shows the (1) financial health of the company and (2) what activity or initiatives the company is taking.
Looking at the financial health of the company can help you to evaluate how the company may perform in the future. For example, income statement can show how profitable the company is, balance sheets can show what assets the company possesses and who are the claimants of the company and the cashflow statments show how cash is being used and received. This can then be an indicator of future performance.
Knowing what initiatives the company has been doing may also be an indicator of how the company may continue on them. For example, increasing levels of cash from the issuing of debt by a company could mean that the company may be poised to acquire other investments in the future.
Of course a disadvantage of historical information is that it may be irrelevant. Information related to how the business has grown may also not be present in the financial statements, such as change in management, new competition etc. This sort of information probably needs to be sourced from external sources such as news outlets, announcements, management disclosures and research reports.
Hello! Yes I hear where you are coming from on this, I'll just share about some thoughts I have, some pros and cons of historical information.
Financial information may be historical, but then they show you how the company can performed before. This may be an indicator of how the company will perform in the future since it shows the (1) financial health of the company and (2) what activity or initiatives the company is taking.
Looking at the financial health of the company can help you to evaluate how the company may perform in the future. For example, income statement can show how profitable the company is, balance sheets can show what assets the company possesses and who are the claimants of the company and the cashflow statments show how cash is being used and received. This can then be an indicator of future performance.
Knowing what initiatives the company has been doing may also be an indicator of how the company may continue on them. For example, increasing levels of cash from the issuing of debt by a company could mean that the company may be poised to acquire other investments in the future.
Of course a disadvantage of historical information is that it may be irrelevant. Information related to how the business has grown may also not be present in the financial statements, such as change in management, new competition etc. This sort of information probably needs to be sourced from external sources such as news outlets, announcements, management disclosures and research reports.