How to check a company's financial health before investing
Practical guide to company financial analysis — KRS, financial statements, key ratios. How to evaluate a company before buying stocks.
11 min czytaniaBefore you buy stocks — check the company
Buying stocks without financial analysis is like buying a car without a test drive. Even if you mainly invest in ETFs, it's worth understanding how to read a company's financial condition — if only to know what you have in your portfolio.
Where to look for data?
KRS (National Court Register)
On the ekrs.ms.gov.pl website, you'll find basic data about every company registered in Poland: management, share capital, business activities. This is your starting point.
Financial statements
- Listed companies — quarterly and annual reports on IR (investor relations) pages or in the GPW service (gpw.pl)
- Unlisted companies — reports in the Financial Documents Repository (ekrs.ms.gov.pl)
- Analytical services — Biznesradar.pl, Stooq.pl, Stockwatch.pl
Three key documents
- Balance sheet — what the company owns (assets) and what it owes (liabilities)
- Income statement — how much it earns and spends
- Cash flow statement — where cash flows in and where it flows out
Key financial ratios
Profitability
| Ratio | What it measures | Good level |
|---|---|---|
| Net margin | Net profit / Revenue | >10% (depends on industry) |
| ROE | Net profit / Equity | >15% |
| ROA | Net profit / Assets | >5% |
Debt
| Ratio | What it measures | What to watch |
|---|---|---|
| Debt/Equity (D/E) | Debt vs. equity | >2 is a warning signal |
| Interest coverage | EBIT / Interest expense | <3 — risk of problems |
Valuation
| Ratio | What it measures | Interpretation |
|---|---|---|
| P/E | Price / Earnings per share | Lower = cheaper (relatively) |
| P/BV | Price / Book value | <1 = below book value |
| EV/EBITDA | Enterprise value / EBITDA | Compare within industry |
Cash flows
This is the most important report that many investors skip. A company can have nice net profit, but if operating cash flows are negative, it's not generating cash. Look for:
- Positive operating cash flows — the company earns real cash
- FCF (Free Cash Flow) — operating cash flows minus capital expenditures (CAPEX)
Red flags
Warning signals that should raise your guard:
- Declining revenues for 3+ quarters
- Rising debt with falling profitability
- Negative operating cash flows — the company is "burning" cash
- Frequent auditor changes or reservations in the auditor's opinion
- Related party transactions on unusual terms
- Management massively selling shares (insiders selling)
30-minute analysis — quick checklist
You don't have to read a 200-page report. Quick analysis:
- ✅ Are revenues growing year over year?
- ✅ Is net margin stable or growing?
- ✅ Are operating cash flows positive?
- ✅ Is Debt/Equity < 2?
- ✅ Is P/E lower than industry average?
- ✅ Are there no auditor reservations?
If you answered "yes" to most — the company looks solid. If not — dig deeper or look for another.
How Freenance can help
Freenance allows you to track the value of your stocks and ETFs in your portfolio, monitor diversification and observe how individual positions affect your total net worth. Conscious investing starts with data.
Want full control over your finances?
Try Freenance for free