Types of Information and their effect:
Partial Information:
It is a fact that financial markets change rapidly. This is a result of the instant market interaction with the sudden periodical and daily information and news whether their source was the media, the government or the companies themselves. Information and news can be divided into two independent categories each one has its own characteristics. Partial information, as the name suggests, focuses on specific news that are related to the developments in local companies such as issuing and publishing quarterly reports, annual reports and detailed press releases. Such news could leave relatively large-scale effects on the financial markets especially if the information is associated with a leading industrial company. However, the effect of partial information is usually limited to the targeted company and might reach its primary competitors in the sector.
Overall Information:
When overall information such as the changes in GDP and the inflation rate are released, they often affect the entire market and the effect may reach to international markets as well. For example, a report referring to a large increase in the government spending rate might have a positive effect on the market. It will lead most of the investors to believe that the levels of public demand will improve and growth levels will help the benefiting companies to increase their capital, thus, contributing to higher demand for factors of production and utilizing more of them. International economic and political instability is another example for the effect of overall information on financial markets. International financial markets have become largely interdependent, which makes it possible for the political and economic developments in any country or region to leave their influence on all international markets.
What are the reasons for the changes in macroeconomics? There are some indications and important events that can affect the general status of the market. News on any one of them can have a huge impact on the economy and the capital market. Some of these indicators and events are:
- Energy prices.
- War.
- Fraud and organized crime.
- Political turmoil.
Financial Statement
The company’s quarterly financial statements are considered a good place to start a research when thinking of investing in a company or when monitoring a stock that is already invested in. As a person checks his/her own check book to balance between income and expenditure, companies generally register and control the income and supplies of their obligations. Not only this, but they are required also to publish the information as a quarterly financial statement.
Quarterly financial statements are usually divided into the following parts:
- Statement of Financial Position (The Balance sheet).
- The Income Statement.
- Cash Flow Statement.
Each one of these parts explains a different side of the company’s current performance. The first three parts are repeatedly mentioned in all the listed companies 'statements and have a certain pattern in presenting it.
The phrase “Reading quarterly financial statements” may seem somewhat vague because the statements contain a lot of numbers and few words but knowing what these figures indicate when reading and analyzing , gives the investors the ability to reach very important results. The investor should also pay attention to the auditor’s report attached to the quarterly financial statements as it may include important financial information on any accounting irregularities carried out by the company.