In Forex and in any market, it is necessary to analyze the financial institutions statements that affect the currency market. One can review any country as a company in the case of the currency market, as countries also have expenses, earnings, budgets, assets and a lot of factors that lead analysts to view them as large enterprises.
Even before an investor analyzes the financial statements of a company, he or she should find out what it is that the company does. This is known as the business model of a company, and it refers to how a company makes their money. You can get a good overview of the business model of a company through their social networks, websites and the company objectives that tend to be available for customers to read.
Sometimes business models are easy to understand. A lot of multinational corporations sell medicines, food, produce, electronics, toys and anything that is able to be imported and sold at a retail store. It is a model easy to assimilate, but it can get easily complicated.
A company can manage to become a popular company which is preferred by investors. But problems come when the company does not generate money from their business model. If money is generated through royalties and high interest loans to create franchises and empty assets, the company is nothing more than a generator of franchises, and the administration tends to be forced to close the company receiving the investment. Eventually the company fails and ends in bankruptcy.
Another consideration for investors wishing to make financial statement analysis, which works with any Forex market, is the concept of competitive advantage. The long-term success of a company is largely due to its ability to maintain a competitive advantage. Powerful competitive advantages create a moat around a business that allows them to keep competitors at bay and enjoy better growth and