Before comparing IPO candidates, build a small worksheet with matching periods and clearly labeled units. A headline growth figure alone leaves too many questions unanswered.
Read three statements together
The income statement reports revenue, expenses and profit or loss over a period. The balance sheet records assets, liabilities and equity at a particular date. The cash flow statement separates operating, investing and financing cash movements. Profit and cash generation can differ; the notes explain important accounting choices. SEC financial statement guide.
Make a repeatable worksheet
For each company, write down:
- Reporting period and currency.
- Revenue, operating result and net result.
- Operating cash flow and closing cash balance.
- Borrowings and the relevant repayment dates.
- A page reference beside every number.
Keep a separate column for management metrics so you can inspect their definitions before using them in comparisons.
Work through an example
Illustrative figures: revenue rises from $80 million to $100 million. Growth is ($100 million − $80 million) ÷ $80 million = 25%.
Now ask: are both figures for the same length of period and the same business scope? Write those assumptions beside the calculation. Do not silently compare a quarterly figure with a full year.
Turn the worksheet into questions
Choose one question about growth, one about costs and one about funding. Search the notes for an answer and mark any question that remains open.
Start with the prospectus reading guide to locate the underlying disclosures.
Frequently asked questions
Does a profit mean the company generated cash?
No. Read the cash flow statement alongside the income statement.