NIC’s Weblog

Annual Report – what do they mean

http://www.google.com/search?hl=en&q=howto+read+annual+report+of+a+company

http://websites.quincy.edu/~jschlepp/anrpread.html

http://www.globeinvestor.com/resources/help/help_filters_company.html

http://www.investopedia.com/articles/fundamental/04/060204.asp

http://baystreet.investopedia.com/terms/e/eps.asp

http://www.fool.com/FoolFAQ/FoolFAQ0016.htm

http://www.fool.com/FoolFAQ/FoolFAQ0016.htm

USD INR Fallout

For said companies – short term drop in stocks>?

Participants in FICCI’s current round of export survey have reported that exports in segments such as textiles, gems and jewellery, tea, spices, leather and marine products that contribute strongly to India’s overall exports are extremely price sensitive and the recent movement in the Rupee’s value has started impinging on their export performance.

 

Cash is King

Shareholder value ultimately derives from liquid assets, the assets that can easily be converted into cash. A company’s value is determined by how much in the way of liquid assets it can amass. There are two ways to think about this. The first is to look at terminal value, which assumes for the sake of calculating potential return that at some future point a company will close down its operations and turn everything into cash, giving the money to shareholders. The second is to look at where tangible shareholder value comes from — returns on invested capital generated by the company’s operations. If a company has excess liquid assets that it does not need, it can deploy those assets in two ways to benefit shareholders — dividends and stock buybacks.

1. Current Ratio = Current Assets/Current liabilities.

1. Should be ~1.5.
2. Too high Current ratio mean company may be hoarding assets
3. Check Industry CR to verify

2. Quick Ratio = (Current Assets – Inventories)/Current Liabilities

1. Ideally, ratio should be equal to or greater than 1.

3. Cash Ratio – Total Cash/Current Liabilities (Not used often)

4. Working Capital – is the aboslute lifeblood of the company.

Working Capital = Current Assets – Current Liabilities – inventories (optional)

1. +ve WC is good
2. –ve WC is bad

5. Market Capitalization = Shares Outstanding + Long term debt + Preferred shares

6. Market valuation = Working Capital / Market Cap

Working Capital   (Current Assets - Current Liabilities)

--------------- = --------------------------------------

 Market Cap.  (Shares Out * Share Price) + Debt

1. Basically, if you see working capital to market capitalizations of 50% or higher, things are pretty good.

8. Cash/Equivalents/Market Cap > 10% means company has enough cash.

9. Also, you might want to net out the inventories from working capital and check that percentage just to make sure that the number is not all that different

10. Financial Ratios – See attached jpg

(I am supposed to be adding more ratios here…remind me)