SOFTWARE
The best online resource for stock pickers is the SEC's free Edgar database. It has 60 gigabytes of filings from more than 15,000 publicly traded companies. But Edgar filings aren't exactly user-friendly - gleaning crucial financial ratios from a raw 10-Q balance sheet requires some skill with a calculator and a working knowledge of financial analysis. To ease things, consider a $50 piece of software called Spredgar.
Spredgar, an add-on to Microsoft Excel, converts a 10-K or 10-Q into bar charts of 30 essential financial ratios, such as operating margin and return on equity, as well as a table of 13 other computed values, such as net worth or working capital. It's easy to use: Just cut and paste the Edgar filing from a browser window to an Excel worksheet, run Spredgar, and in less than three seconds it's "spredgarized."
You can start picking stocks just as a money manager would, based on sober measures of profitability, liquidity, and leverage. Forget the noise on the chat boards. Want the real reason why Dell shares have outperformed Gateway's? Dell converts orders into cash more quickly, turning over its inventory 36 times per quarter; Gateway manages only 21 inventory turns. In addition, Spredgar can now crunch ratios for banks, utilities, and insurance companies, industries that each file slightly different types of appendixes.
Spredgar does have some flaws. It doesn't analyze cash flow statements because it only draws data from financial statements' Article 5 appendix, which doesn't include cash flow information.
Spredgar also lacks context. Knowing a company's return on capital is meaningless without knowing how it compares with its industry peers. But this is being fixed. The upcoming version 2.0 is built around a more convenient stock portfolio format rather than individual Excel worksheets. You can look at up to 20 stocks at a time with price histories and quotes, along with direct Web links to Edgar filings that pop up already spredgarized.
Spredgar: www.spredgar.com.
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