Cash flow from company's operating activities shows the investors the amount of money a company brings in during the normal course of business. Operating activities are the most complex of the three sources shown in a statement of cash flow. This statement is prepared by taking the company's net profit shown in income statement and then a number of additions and … [Read more...] about How to calculate cash flow from operating activities
Archives for April 2019
Relevance of financial statements in fundamental analysis
Financial statements are the cornerstone of fundamental analysis. It has three key financial documents: the income statement, balance sheet, and statement of cash flows. Publicly listed companies are required to follow financial reporting rules of the country in which they are listed. Most of these stock exchanges and financial rules in the country require companies to … [Read more...] about Relevance of financial statements in fundamental analysis
What is fundamental analysis and why it’s used by investors
Fundamental analysis is a process of analyzing every aspects of a company's operations in order to determine the value of a stock, known as intrinsic value of a share. This means, it will let you know what you are getting when you buy a stock. By using fundamental analysis, you can find out whether a stock is cheap or expensive by comparing its current market price to the … [Read more...] about What is fundamental analysis and why it’s used by investors
What is special purpose vehicle or entity – SPV/SPE
Special purpose vehicle or SPV is a project company that consists of consortium of shareholders specifically created to build and operate projects. It's also known as special purpose entity/corporation or project company. Special Purpose Vehicle can be formed either as a single legal entity or a joint venture consortium. The main motto for creating a SPV can be to purchase, … [Read more...] about What is special purpose vehicle or entity – SPV/SPE
Difference between Intrinsic value and Current market value
As a investor, before investing in a publicly traded company, you should know when a stock is over or undervalued. To find it out, the first thing you should know is the intrinsic value of a stock and then compare it with the current market price. In this article, we will be discussing the difference between intrinsic value and current market value of a publicly traded … [Read more...] about Difference between Intrinsic value and Current market value
How to analyze company’s profitability by using income statement
By buying stocks, you are claiming a piece of the company's earnings or profit. As a fundamental analyst, your first thing is to evaluate following things to know how well the company has done financially: How much money it brought in, and how much it spent to operate, andAmount of profit it generated. If you have evaluated and invested right, then the company will … [Read more...] about How to analyze company’s profitability by using income statement
Financial tools to help you assess company’s liquidity position
Liquidity position of a company will tell you whether the organization has staying power in tough times. Analyzing company's liquidity position involves examining the relationship of current assets and current liabilities and in short run, how well a company can manage and fulfill its short-term obligations. In absence of adequate cash flow to the business, company may go … [Read more...] about Financial tools to help you assess company’s liquidity position
What is project finance and why its needed
Project finance is defined as funding of a single purpose long term infrastructure facility such as pipelines, power plants, highways, ports, metro systems, airports, hospital, chemical facilities, refineries and industrial plant that generates the cash flow to repay the debt as an independent economic unit. It can be formed as a separate legal entity to operate, construct … [Read more...] about What is project finance and why its needed
What is statement of cash flows and why its prepared
In accrual accounting system, income is reported when earned, not necessarily when cash is received. For example, when company made sales on credit, right to receive money in future is created in exchange of goods or services. These transactions are recorded on the income statement as revenues / sales. However in these type of cases, company has not received any money at the … [Read more...] about What is statement of cash flows and why its prepared
Return on equity (ROE): How to calculate and its use
Assets are financed in part by liabilities and in part by equity. Value investors are not interested to know how much return the company gets from its total investment (debt plus equity), but rather they are interested in the return that the company generates on their shareholdings. To measure how the stockholders are fared during the year, return on equity (ROE) is … [Read more...] about Return on equity (ROE): How to calculate and its use