Recently, I got a query from one of my young reader (in 20s). The question says: “I have heard that ROE and ROCE are important metrics for evaluating stocks. But do they really influence long-term stock returns? If I look at last 10-year period, will it prove that high ROE and high ROCE stocks generate…
Today I’ve read an article on Business Standard which states that, post the merger, HDFC Bank’s Loan Deposit Ratio (LDR) has fallen below the 100% mark. So, I thought why not write a blog post explaining the use and relevance of LDR for us as an investor in banking stocks (my explanation is here). Loan…
I received a message from one of my readers. He wanted to get more clarity about the concept of working capital, and also about the ‘change in working capital.’ He is a person from a manufacturing background hence I thought to explain the topic using a related example. We’ll try to first understand the concept…
Fundamental analysis is a cornerstone of successful stock investing. It empowers individuals to make well-informed decisions in the dynamic world of the stock market. This approach goes beyond the analysis of short-term market fluctuations. Instead, it focuses on evaluating the intrinsic value of a company, uncovering its true worth. At its core, fundamental analysis involves…
Bonus issue and stock splits make news for good companies. Long-term shareholders like this corporate action as it can increase the demand for their holding stock.
The formula of working capital (WC) has two components, current assets, and current liabilities. Both are the numbers of the past. Though it is derived from the past numbers, the working capital use is in the future. This is the reason why it is a vital number in both corporate finance and valuation. Companies report…
Companies need cash to run their day-to-day operations. Working capital management focuses on factors that generate and consumes cash. A company must be capable of generating more cash than it consumes. Cash parked in the company’s bank account is not working capital. We will dig deeper to get a better understanding of the concept of working capital. What Is…
[This article comes in a series of articles written about the fundamental analysis]. People who are interested in long term investing in stocks knows about financial ratio analysis. If you have heard about terms like price to earning ratio, price to book value ratio etc, you know ratios. But in this financial ratio analysis we…
‘Authorised Share Capital’ and ‘Paid Up Share Capital’ are two terms that we as investors must know about. Why? Because changes in the numbers of these metrics can effect our investment returns (read here). Company needs capital to establish its assets and run its operations. From where the company will source its capital? It can…
Stock Price Prediction Tool How is the stock P/E compared to its industry P/E: HigherLower Have the revenue risen from the last 4-quarters? YesNo Have the EPS risen from the last 4-quarters? YesNo Retail investors have increased their stake since the last 4-Quarters? YesNo DIIs have increased their stake since the last 4-Quarters? YesNo FIIs…
Warren Buffett’s rules of investing are not just rules, they are principles based on which good businesses operate. So it would not be wrong to say that Warren Buffett is not just a great investor, he also has extraordinary business acumen. So let’s try to first dig into the roots of Warren Buffett and his investment…
Every balance sheet transactions recorded by the company, alters its Balance sheet. For investors, it is interesting to understand balance sheet transactions of companies. Though the understanding of balance sheet transactions is not essential, but its knowledge helps. It will greatly help value investors to read and interpret companies financial reports. When I started learning about balance sheet…
