When you get the balance sheet of 2 companies that you want to compare the first thing you do is to make sure that both are in the same language! So if you are comparing Toyota Motors, Form Motors and Tata Motors – you need to bring them all to US $, and then start […]
Well if I write this after 102…it has to be 103 I presume? Yes, it is taking it forward from 102 so I am calling it 103 When comparing the performance of any two companies, remember that comparisons have to be between companies that are comparable. If you want to compare a metal container company […]
I had to call this 102 because I have already dealt with ‘what if fundamental analysis’ in the past. Also FA starts with knowing that there is a PnL, B/Sheet, MDA (Management discussion and Analysis) to start with. Of course there are ratios to be calculated, cash flow statement to be seen…etc. Now let us […]
Cash flow statements are of a recent origin – it was not available to us in the 1980s – and we had to create it ourselves. It is a statement which shows the inflow and outflow of cash – for a particular period of time (like the Profit and Loss account). It shows you how […]
All of us know that a company can make a profit or a loss. So why is this statement (account) called Profit and Loss account? the Americans call it the ‘Income statement’. Simple. This account summarizes all the financial activities – so if you made a loss by selling a car, and profit by selling […]
The shareholders put money into a company to do business. How much is the money that shareholders put into a company? Money that they actually invested as equity Money that they actually invested as premium Money that they DID NOT TAKE AWAY as dividend – aka the profits left in the business What is all […]
Knowing accountancy and understanding the basics is a pre-requisite for investing in direct equity. However, some people believe that this is ENOUGH. Sadly, this is not so. Once you start understanding accountancy you will appreciate that numbers taken in isolation do not work. You will realize that “avoid companies with debt” or “company should have […]