Do you know the basic difference between futures and forwards? Futures represent an improvement over forwards in two ways. Firstly, futures are traded on a recognized stock exchange and hence are extremely liquid. More importantly, future are standardized while forwards are not standardized, which is why they are often referred to as over the counter …
Working capital management in a company is all about a trade off between the current assets and current liabilities of the business. Typically, current assets and current liabilities get created in the normal course of operations. Let us understand the dynamics with an illustration. A steel manufacturer, Special Steels Ltd, buys raw ore and …
When we talk of company evaluation, most of us tend to get caught up in the big picture. Capital structure, fixed assets investment, borrowings, net worth, ROE, ROCE; these are the issues we normally consider most relevant to valuation. But did you know that most of these big picture items cannot really be of any …
When TCS announced its second round of buyback of shares worth Rs.16,000 crore, it has once again raised the debate on how should companies in India reward shareholders. Broadly, there are two ways of rewarding shareholders viz. dividends and share buybacks. After the Union Budget 2016 made dividends above Rs.1 million taxable at 10% in …
Over the last 10 years you have painstakingly created a solid equity portfolio consisting of a mix of blue chip stocks and quality mid cap stocks. Your portfolio value has multiplied and you realize that you have made big gains over the years. Your friends advise you to just take the profits and walk out, …
Returns on investments are for the short term and the long term. Some investments generate trading returns in a very short span of time. Some investments like Wipro and Havells can give phenomenal returns only if held for many years. The big question is how to balance between the two. You need short term returns …
Intraday trading is all about initiating and closing out your trades on the same day. For example if you buy 500 shares of Reliance in the morning at Rs.920 and sell it by evening at Rs.928, then you can book a profit of Rs.4000 (500×8) intraday. This trade does not result in any delivery as …
You may surely find this quite amusing! What are there steps to being profitable in intraday trading? Actually, there is no real guide that can help you to consistently make profits in intraday trading. But intraday trading is all about managing your risk and the returns normally follow logically. While they still cannot guarantee profitability, …
In the world of finance there are a good number of ratios to evaluate companies. There are profitability ratios, efficiency ratios, solvency ratios and liquidity ratios. Within the gamut of profitability ratios, two very important ratios are the Return on Equity (ROE) and the Return on Capital Employed (ROCE). Both these measures look at the …
If you are an equity investor what would you typically rely on? You would rely on a research report or on technical calls. Let us leave out technical calls for the time being as our focus is more on long term investments. Long term investing is based on a research technique called fundamental analysis. What …
