Price earning ratio, is used to do a comparative evaluation while purchasing a stock. In most of the news paper, It is given by the name of P.E. ratio.
Now what is price earning ratio?
Price earning ratio is Market price of equity share/Earning per share.
More price earning ratio means stock is more valued in market.
If there are two stocks of same Industry and same status, like Infosys and wipro and for ex:- Infosys has more P.E. ratio and wipro has less, that means Infosys is over valued in comparison of wipro.Thus Wipro is a better stock to buy in comparison to Infosys. And In case Industry PE is even higher then Infosys is also a good buy but wipro is even better.
Further information will be given according to the questions received.
Monday, August 23, 2010
Friday, August 6, 2010
Target
Medium term target:
Target for all the readers of this blog is to analyse the budget and measure the effects of the budget on the Indian economy.
I am sure that, by the time budget will be announced, all the regular readers of this blog will be able to achieve the task given as target.
ALL THE BEST.
Target for all the readers of this blog is to analyse the budget and measure the effects of the budget on the Indian economy.
I am sure that, by the time budget will be announced, all the regular readers of this blog will be able to achieve the task given as target.
ALL THE BEST.
Views for the news
It is very important to keep a clear view on news to create good understanding of business scenario. now as we all know it is really tough to analyse a news article and fetch the relevant information. To develop these skills, you have to follow these points.
1.Read the complete article with focus.
2.Be very sure about the fact that you are reading this news because you are very selfish.
3.Now you know that you are selfish, then read the news with the prospective of gaining something. Look for the things which effects you or you industry.
4.Be careful about the fact that behind every news there is a fix strategy, and the strategy is to raise viewership, remember newspapers are not the social servants.
5.If you will monitor a news, you will find two types of ingredients in it. first is core news and second is spice. Your most important task will be to absorb the news and remove the spices.
6.For a business any kind of news can create speculative environment, for example cricket and manufacturing industry have no connection but still any specific news of cricket can have effect on manufacturing industry. Say ICC announce that from next time every test match will be of day-night format.
Than what will happen, is that the manufacturing of red balls will go down, and white/pink will go up. The manufacturing of stadium lights will go up, which will generate revenues for involved companies.
that was the rarest example possible in my views. And anyone who will go after the news with this approach he/she will be definitely benefited.
1.Read the complete article with focus.
2.Be very sure about the fact that you are reading this news because you are very selfish.
3.Now you know that you are selfish, then read the news with the prospective of gaining something. Look for the things which effects you or you industry.
4.Be careful about the fact that behind every news there is a fix strategy, and the strategy is to raise viewership, remember newspapers are not the social servants.
5.If you will monitor a news, you will find two types of ingredients in it. first is core news and second is spice. Your most important task will be to absorb the news and remove the spices.
6.For a business any kind of news can create speculative environment, for example cricket and manufacturing industry have no connection but still any specific news of cricket can have effect on manufacturing industry. Say ICC announce that from next time every test match will be of day-night format.
Than what will happen, is that the manufacturing of red balls will go down, and white/pink will go up. The manufacturing of stadium lights will go up, which will generate revenues for involved companies.
that was the rarest example possible in my views. And anyone who will go after the news with this approach he/she will be definitely benefited.
Wednesday, August 4, 2010
Effect of leverage on Industry.
Leverage is a very broad concept and really very important, specially for operation and finance people.
Conceptual and examination related knowledge will come from text books, here I am not going to discuss on that. Here I am writing on, "how leverages works in real world of finance"
One aspect of leverage is debt/equity ratio. In simple language it can be said as-
Total loan taken/shareholder's capital.
Ex- A's shareholder's capital=50,000
in case company a holds a loan amounting rupees=25000 Debt/equity ratio=0.50 and
in case company a holds a loan of rupees=100000 then Debt/equity ratio=2
Now the question is- why this ratio is so important?
It is very important to know the risk profile of the company as well as it also tells us about owner's Confidence in the company.
Risk- As happened in 2007-2009 Companies had taken huge amount of loan which lead to their collision.
In Lehman brothers case the debt equity ratio was around 29 times in last annual financial statement.
It means if Lehman brothers had $1 of their own they had $29 payable to others.
Confidence of owner- In case owner has issued more than 50% of his Equity Capital the confidence of owner can be questioned, but it doesn't mean that the owner have loosed his confidence in the company, there can be other reasons also. But if owner is continuously declining his holding in the company and hesitating in raising money through loans then these are the clear signals of loosing faith in company.
It means that owner is not sure if his company will be able to repay loans. In this case you will find promoter's holding declining over the period of time and debt/equity ratio also declining.
Conceptual and examination related knowledge will come from text books, here I am not going to discuss on that. Here I am writing on, "how leverages works in real world of finance"
One aspect of leverage is debt/equity ratio. In simple language it can be said as-
Total loan taken/shareholder's capital.
Ex- A's shareholder's capital=50,000
in case company a holds a loan amounting rupees=25000 Debt/equity ratio=0.50 and
in case company a holds a loan of rupees=100000 then Debt/equity ratio=2
Now the question is- why this ratio is so important?
It is very important to know the risk profile of the company as well as it also tells us about owner's Confidence in the company.
Risk- As happened in 2007-2009 Companies had taken huge amount of loan which lead to their collision.
In Lehman brothers case the debt equity ratio was around 29 times in last annual financial statement.
It means if Lehman brothers had $1 of their own they had $29 payable to others.
Confidence of owner- In case owner has issued more than 50% of his Equity Capital the confidence of owner can be questioned, but it doesn't mean that the owner have loosed his confidence in the company, there can be other reasons also. But if owner is continuously declining his holding in the company and hesitating in raising money through loans then these are the clear signals of loosing faith in company.
It means that owner is not sure if his company will be able to repay loans. In this case you will find promoter's holding declining over the period of time and debt/equity ratio also declining.
Tuesday, August 3, 2010
Economy growing ahead
These days India's manufacturing is the buzzing story. Companies around the world are getting interested to establish their manufacturing units in India. Today's business standard has a story about mobile companies, which are going to raise their manufacturing capacities in India up to 640% from now.
Mobile companies are not alone in this race many companies are inclined toward India after HSBC Showed manufacturing in India is growing, on the other hand Manufacturing in China and US is shrinking.
Automobile sector is also showing some growth in manufacturing led by the improving exports.
Growth in manufacturing will diversify the growth portfolio of India and will provide cushion to service sector in growth ahead.
Stocks of manufacturing companies will get support from this trend and if India will be able to capitalise on this opportunity, complete Economy will reap benefits of it due to increased cash inflow and better employment opportunities.
Mobile companies are not alone in this race many companies are inclined toward India after HSBC Showed manufacturing in India is growing, on the other hand Manufacturing in China and US is shrinking.
Automobile sector is also showing some growth in manufacturing led by the improving exports.
Growth in manufacturing will diversify the growth portfolio of India and will provide cushion to service sector in growth ahead.
Stocks of manufacturing companies will get support from this trend and if India will be able to capitalise on this opportunity, complete Economy will reap benefits of it due to increased cash inflow and better employment opportunities.
Monday, August 2, 2010
Reality of growth
The whole world is going crazy about our growth, and we are achieving milestones at regular basis. There is no doubt about the growth we are achieving, but is our growth translating into development.
There is a big difference between growth and development. Development includes all, and is sustainable.
Why I am asking this question? Is there any sense behind it?
And the answer is yes, it is. Because the fact which is getting neglected over here is, rich is becoming richer and poor are becoming poorer. According to "Human development index" India is ranked at 134 among 182 nations. "HDI" shows the standard of living of a country people.
From the year 1980 to 2007 India's Growth points in HDI index have rose to 0.612 from 0.427.
On the other hand sensex rose to 20,000 from 100 in the same period.
These two lines are enough to describe that what we see is not the truth, we are actually fooling ourselves. That's absolutely true that we are growing but certainly not developing.
Ques. What is the actual problem ?
Ans. Answer lies in this example.
EX:-
Now let's consider that we are the educated people hence we will be the part of upcoming growth. OK. we assumed that.
After 10 years
Now you are the millionaire, very happy and well developed.
And those people who were left behind are your servants.
And those people who were left behind miserably, 30% died of hunger and other problems and 70% Became criminals. Now just assume how many criminals will be there.
One of them kidnapped your "Son or any other close relative" and killed him for ransom.
Now your millions will be able to fulfill your grief ! OR not ????
Certainly not.
And the possibilities of happening this will be very high, skying high! Because there will be millions of criminals, and they will commit in-numerous crimes in there lifetime.
So, on an average every citizen of our country will have to face 8 to 10 such crimes in his/her lifetime.
By 2025 India will be the Third Biggest Economy of the world. With the highest population and the highest crime rate.
By 2050 India will be the worst place in the world to live in Because It will be very tough to stay "alive" in India. But India will still be the third biggest economy.
If you can see your dear one's getting killed and you have lot of money with you there is a big reason to cheer for you, but if not there is a very big reason to worry for you.
The only solution:-
"We" are the only solution to this upcoming problem for India. Yes, we are the solution.
Only if, we will initiate to help poor children to become a professionals then only we will have less criminals.
Suppose you helped one street beggar child to become a professional, you will see one less criminal and one more professional in future.
And if all the people, who are in good financial condition start helping for this cause. There will not be single criminal in 2025. And India will be the biggest economy of the world and Chinese will be our servants in home. So, please help in this cause it will definately come back to you.
There is a big difference between growth and development. Development includes all, and is sustainable.
Why I am asking this question? Is there any sense behind it?
And the answer is yes, it is. Because the fact which is getting neglected over here is, rich is becoming richer and poor are becoming poorer. According to "Human development index" India is ranked at 134 among 182 nations. "HDI" shows the standard of living of a country people.
From the year 1980 to 2007 India's Growth points in HDI index have rose to 0.612 from 0.427.
On the other hand sensex rose to 20,000 from 100 in the same period.
These two lines are enough to describe that what we see is not the truth, we are actually fooling ourselves. That's absolutely true that we are growing but certainly not developing.
Ques. What is the actual problem ?
Ans. Answer lies in this example.
EX:-
Now let's consider that we are the educated people hence we will be the part of upcoming growth. OK. we assumed that.
After 10 years
Now you are the millionaire, very happy and well developed.
And those people who were left behind are your servants.
And those people who were left behind miserably, 30% died of hunger and other problems and 70% Became criminals. Now just assume how many criminals will be there.
One of them kidnapped your "Son or any other close relative" and killed him for ransom.
Now your millions will be able to fulfill your grief ! OR not ????
Certainly not.
And the possibilities of happening this will be very high, skying high! Because there will be millions of criminals, and they will commit in-numerous crimes in there lifetime.
So, on an average every citizen of our country will have to face 8 to 10 such crimes in his/her lifetime.
By 2025 India will be the Third Biggest Economy of the world. With the highest population and the highest crime rate.
By 2050 India will be the worst place in the world to live in Because It will be very tough to stay "alive" in India. But India will still be the third biggest economy.
If you can see your dear one's getting killed and you have lot of money with you there is a big reason to cheer for you, but if not there is a very big reason to worry for you.
The only solution:-
"We" are the only solution to this upcoming problem for India. Yes, we are the solution.
Only if, we will initiate to help poor children to become a professionals then only we will have less criminals.
Suppose you helped one street beggar child to become a professional, you will see one less criminal and one more professional in future.
And if all the people, who are in good financial condition start helping for this cause. There will not be single criminal in 2025. And India will be the biggest economy of the world and Chinese will be our servants in home. So, please help in this cause it will definately come back to you.
Subscribe to:
Comments (Atom)