How to Get Financial Statements Using Python

Summary

In this tutorial, the presenter demonstrates how to fetch financial statements, such as the balance sheet, income statement, and cash flow, using Python. Leveraging libraries like Yahoo Query and yFinance, users learn how to collect data for any stock symbol, clean it, and store it in a usable format. The tutorial also covers how to calculate key financial ratios like the current ratio, quick ratio, and debt-to-equity ratio automatically. Additionally, the video touches on potential issues with inconsistent line items across different companies and industries, making it a valuable guide for automating financial analysis.

Takeaways

• 😀 Python libraries like Yahoo Query and Yahoo Finance can be used to gather financial statements such as balance sheets, income statements, and cash flow from Yahoo Finance API.
• 😀 The script demonstrates how to import libraries like pandas, numpy, time, and datetime to work with financial data in Python.
• 😀 Yahoo Query allows you to retrieve a financial statement by creating a ticker object with the specified stock symbol, such as Apple in the example.
• 😀 Data cleaning and organization can be done easily by converting date columns to datetime types, setting them as the index, and removing unnecessary columns.
• 😀 Yahoo Finance API can also be used to gather financial data without needing parentheses for method calls when using the balance sheet attribute.
• 😀 DataFrames can be transposed to make line items the columns, and sorting the index can help organize the financial statements.
• 😀 Financial ratios such as the current ratio, quick ratio, and debt-to-equity ratio can be calculated automatically using financial statements from Yahoo Finance API.
• 😀 The current ratio is calculated by dividing current assets by current liabilities to assess whether a company has enough liquid assets to cover short-term debts.
• 😀 The quick ratio is a more conservative measure of liquidity, excluding inventory from current assets since inventories may not be easily liquidated in the short term.
• 😀 The debt-to-equity ratio is calculated by dividing total debt by stockholder equity to assess the company’s financial leverage.
• 😀 The script highlights that financial statements for different industries may use different terminology, and some line items may not be present across all companies (e.g., Bank of America’s balance sheet).

Q & A

What is the main objective of this video script?

The main objective of the video is to demonstrate how to retrieve financial statements (such as balance sheet, income statement, and cash flow) from Yahoo Finance using Python. It also covers performing automated financial ratio calculations and analyzing trends in financial data.

Which Python libraries are used in this video to retrieve financial data from Yahoo Finance?

The video uses two Python libraries: 'yahooquery' and 'yfinance' to retrieve financial statements from Yahoo Finance.

Why is pandas used in this script?

Pandas is used to handle and manipulate the financial data retrieved from Yahoo Finance. It allows for tasks like cleaning up data, setting indices, and performing calculations, making the data easier to work with.

What is the significance of setting 'display.max_rows' and 'display.max_columns' to 'None' in pandas?

Setting 'display.max_rows' and 'display.max_columns' to 'None' in pandas ensures that the entire dataset is visible without truncation, which is useful for viewing the complete financial statement during analysis.

What is the difference between 'yahooquery' and 'yfinance' libraries in terms of retrieving data?

While both libraries allow access to financial data from Yahoo Finance, 'yahooquery' requires parentheses when accessing methods like 'balance_sheet', while 'yfinance' does not. 'yfinance' returns financial data with dates as columns and line items as rows, which can be transposed for easier manipulation.

How does the 'as of date' column get processed in the script?

The 'as of date' column is first converted to a datetime type and then set as the index of the data frame. This ensures that the date is correctly formatted for analysis and makes it easier to compare financial data over time.

What are the key financial ratios calculated in the script?

The script calculates three key financial ratios: the current ratio, quick ratio, and debt-to-equity ratio. These ratios help assess a company's liquidity, financial stability, and ability to meet short-term and long-term obligations.

How is the current ratio calculated in the script?

The current ratio is calculated by dividing current assets by current liabilities. This ratio helps determine whether a company has enough assets to cover its short-term obligations.

Why is the quick ratio considered more conservative than the current ratio?

The quick ratio is more conservative because it excludes inventory from current assets. Inventory is not as liquid as cash and may take time to sell at market value, so excluding it provides a clearer picture of a company's ability to meet short-term liabilities with readily available assets.

What issue is highlighted in the script when analyzing Bank of America's financial statements?

The script highlights that some financial statements, such as those for Bank of America, may not have certain line items like 'current assets'. This demonstrates that different companies may use different terminologies or have varying formats in their financial reports.