Finance

Fundamental analysis helps investors determine the intrinsic value of a security by evaluating a company's financial health, performance metrics, and growth potential, enabling informed investment decisions. By focusing on underlying economic and financial factors, fundamental analysis encourages a long-term investment strategy rather than short-term speculation. But, … [Read more...] about Why Fundamental Analysis Isn’t Enough: Ten Key Limitations

A publicly traded company has to compulsorily publish its income statement in addition to other financial statements for a quarter or year to the public. These statements are to be filed with the government and stock exchanges as per the rules and regulations of the country. Income statement is also known as profit and loss account. It depicts the total revenues, cost of … [Read more...] about Why and How to analyze company’s income statement

Company can't keep all the money they brought from customer by selling products or services. A major portion goes out in paying for all direct and indirect expenses incurred to generate money. A simple cost analysis can tell you whether the company is a good investment or not. Income statement of a company record all expenses under different heads to tell investors how they … [Read more...] about How to do company’s cost analysis for investing in stocks

Ratio analysis is designed to reveal financial strength and weaknesses of a company. By comparing company’s ratios to industry standards and competitors. you can easily know whether its financial position has been  improving or deteriorating over the years. Before analyzing financial statements of a company, we suggest you to examine quality of financial data available … [Read more...] about How to calculate debt to assets ratio

Interest coverage ratio measures the creditworthiness of a company by comparing earnings before interest and taxes (EBIT) with the interest. Its a financial ratio that measures company’s ability to make payments for debts. In other words, it gives a better picture to know the short-term financial health of a company. Here is the formula to calculate the ratio: Interest … [Read more...] about How to calculate Interest coverage ratio

In our last article we have discussed about inventory turnover ratio to know how effectively the company is managing its stock of goods to make money. In this article we will show you how to compare inventory to net working capital. In current assets, inventory is considered as the least liquid asset even though company makes money by selling it to customers. To know how … [Read more...] about How to calculate Inventory to net working capital ratio

In our last article we have discussed how to calculate fixed assets turnover ratio. In this article, we wants to measure how well the company has generated sales from its total assets during a particular period. As this ratio is a comparison of company's total assets to the total revenue/sales, its known as total assets turnover ratio. Total assets turnover ratio tells us … [Read more...] about How to calculate total assets turnover ratio -TAT

Off balance sheet financing means providing funds to a subsidiary or project company where project’s related assets, liabilities and others are held and not considering it into the liability and assets sides of parent or sponsor company’s balance sheet. In general, when a company need funds to expand its business by purchasing assets, hiring personnel or by acquiring other … [Read more...] about Off balance sheet financing or OBS – How it works