Which of the following is a method investors use to assess a company's financial health?

Analyzing financial statements is a critical method for investors to assess a company's financial health. Financial statements, which include the balance sheet, income statement, and cash flow statement, provide a comprehensive view of a company’s financial performance and condition over a specific period.

These statements reveal essential information such as revenue, expenses, profits, assets, liabilities, and cash flow. By evaluating these metrics, investors can determine how efficiently a company operates, its profitability, and its ability to meet financial obligations. A thorough analysis may help identify trends, potential risks, and growth opportunities, enabling investors to make more informed decisions.

While studying market trends, reviewing management team qualifications, and following stock price movements are important aspects of investment analysis, they do not provide the same level of detailed financial insight as analyzing the actual financial statements of a company. Each of these other methods can offer valuable context or supplementary information, but the financial statements remain the foundational tools for assessing the financial health of a business.