Posts Tagged: fundamental analysis

Investing

What should an investor look for in quarterly reports?

As a shareholder, do you forget holding the shares of a particular company, or are you anxious to know what is happening with the company whose shares you are holding? Well, if you belong to the second category, quarterly results are your savior.

Investing

How Important is ROE for Investors?

Forget head-and-shoulders, bear traps double bottoms, forget volume, and forget stochastics. When you’re looking at a company, the single-most-important number is return-on-equity. Return on Equity is how much profit a Company generates when compared to shareholder equity. What makes ROE so good as a tool to analyze a Company is because it doesn’t account for the price of the stock. It only measures the company’s performance not the stock’s performance.

Investing

What is Discounted Cash Flow?

Imagine the scenario where you decide to invest a specific portion of your pocket money say Rs1000 into stocks. Well, how would you select the appropriate stock? Will you blindly follow the advice given by your friends and family, or would you, as an intelligent investor, do a cost-benefit analysis?

Investing

What is Interest Coverage Ratio(ICR) and its Importance

A layman can end up losing his hard earned money if he doesn’t take his investment decision wisely and picks a stock randomly just by looking at its numbers flashing on the real time stock screen.

Investing

What is Quick ratio & Reasons for its Usage

An invetsor who tends to buy stocks should evaluate the financial statements of the company with great seriousness.

Investing

Why is analysing Cash Flow Statements Important?

Cash flow statement is an important financial statement that analyses and summarises the amount of cash and cash equivalents that enter and leave the company. It measures how effectively a company is utilising its cash balances that is, how well it manages its operating expenses and how well it generates cash to pay its debts.

Investing

Does your company have enough Liquidity?

Your company’s revenue figures are great to flaunt, but they don’t ultimately mean much if your cash flow is out of whack. Profit offers peace of mind, surely, but it doesn’t indicate that your business financials are sound. Only stable, reliable cash flows can truly demonstrate success.

Investing

What is the Fixed Asset Turnover (FAT) Ratio?

A fixed asset turnover ratio is an efficiency ratio that shows the return received by a company on the investments made by them in fixed assets such as plant, machinery, equipment, etc., in relation to the total sales generated. In other words, it measures how efficiently a company uses its fixed assets to make sales. Creditors and investors refer to this ratio to identify the efficiency of the company in managing its fixed assets. They do so to interpret the returns they might earn on their investments made in the company and make sure that the earnings/revenues from the equipment are enough so that the company can pay back the loans that it has taken for it. The formula for calculating the fixed asset turnover ratio

Investing

Why is it important to understand your investments?

“Caveat Emptor” or “Buyers Beware” is the central theme that runs across the world of investing. Every investor should have truckloads of knowledge about the investing world and where they are investing in. In this Monetary world, people want quick money.. easy money.. fast money.. And for this, they often resort to fraudulent activities, embezzlement, treachery, etc.

Investing

Importance of Contingent Liability in Financial Statement Analysis

To answer this question, first, we have to understand what contingent liability is. A contingent liability is the potential or uncertain loss that may occur at some point as an outcome of a specific event. It is not an absolute obligation; it may or may not happen depending on how the future unfolds itself. It is recorded only if the liability amount can be estimated relatively. According to the practice of disclosure in the conservative approach of accounting, the liability may be disclosed as a footnote in the financial statements of a company or not reported if conditions are not met. Therefore, the contingent liability has no such accounting treatment — for example, potential lawsuits, product warranties, and pending investigation. Contingent liabilities are possible obligations, which may or may not occur in the future and disclosed in the notes to the accounts.

Investing

What is Debt Ratio to equity ratio?

It is imperative and a task of paramount importance for an investor to examine the financial performance of a company from every angle before investing a single penny in that company. The true worth of the company can be detected by analyzing its financial ratios.

Investing

What is credit rating

Before we go about on how credible the credit ratings are, allotted by the rating companies, it is important to have a clear understanding of what these credit ratings are? How do they function? And who actually assigns these ratings to companies?

Investing

Retained Earnings

When you start a business, you eventually start gaining the profits.So, is the entire profit given back to the owner? NO. It is because company would love to invest profit to the business again for future operations. Retained earnings are the part of net profit after tax that company has retained by not distributing to the shareholders to realize certain debts or used as an investment for future expansion plans. It is an important source of internal or self-financing by a company. So, retained earnings are the cumulative amount of profit or loss left after paying all the expenses and dividend to the shareholders. The cumulative here means it is a continuing account year after year and doesn’t close at the end of the accounting year. The retained earnings are also known as earned surplus, retained capital, plowing back of profits or accumulated earnings.

Investing

Efficiency Ratios Analysis

As an investor, you need to determine how productively your company is managing its assets and liabilities to maximize profits.Revenue turnover, profits or assets; all these figures may tell you, how big an enterprice is . However, these figures cannot give you an idea whether the business is efficient or not.