Value Investing 2021 MasterClass | Learn Fundamental Analysis of Stocks | Gaurav Khullar | Skillshare

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Value Investing 2021 MasterClass | Learn Fundamental Analysis of Stocks

teacher avatar Gaurav Khullar, Professional Banker(10 Years Experience)

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

22 Lessons (2h 16m)
    • 1. Introduction

    • 2. Why common investor looses money in Stock Market?

    • 3. How common investors are trapped? Stock Tips Scam

    • 4. Financial Analysis : Analysis of Income Statement

    • 5. Financial Analysis : Analysis of Balance Sheet

    • 6. Financial Analysis : Analysis of Cash Flow Statement

    • 7. Golden Tip- CFO Vs PAT

    • 8. Free Cash Flow : Ultimate measure of stock's true worth

    • 9. Measuring Operating Efficiency

    • 10. Valuation Analysis Intro

    • 11. Price To Earnings Ratio : The Superstar Ratio

    • 12. Price To Sales Ratio : True Measure of Non Earnings Stocks

    • 13. Price To Book Value Ratio

    • 14. Price To Earnings Growth Ratio : PEG Ratio

    • 15. EV to EBITDA Ratio : Why PE Fails and EV To EBITDA comes to play?

    • 16. New Dip MA Strategy Intro

    • 17. Valuation Model : PE Based

    • 18. Valuation Analysis- Finding Intrinsic Value ( True worth of a stock)

    • 19. Business and Industry Analysis

    • 20. Initial Screening/Checklist of Stocks

    • 21. Management Analysis

    • 22. When to Sell a Stock?

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About This Class

-Are you confused and scared of Stock Market?

-Are you totally depended on your broker for investing and stock selection decisions but still loosing?

-Are you often confused how and from where to start your stock selection process?

-Do you find difficulty in entering the stock at low valuations?

If the answer is "YES" , then welcome to this amazing course on How to Eliminate Loss and Profit Consistently in Stock Market.

Most investors often leave stock market with huge losses and myths  in mind like stock market is a place to gamble, stock market is controlled by operators, money can be made only by insider trading etc etc.

But mostly people fail to realise their own mistakes. Their own non ability to learn and often relying on other people for investment decisions. 

This course is for small investors who are engaged in different full time job or business or any other source of income and invest  small amounts in stock market to earn passive income. Even if you are full time investor you will gain lots of new strategies and eye opening facts which you can implement to refine your investment process in stock market.

In this course you will learn-

1) Why ordinary/common  investor loses money in stock market?

2) How retail investors are trapped? Stock Tip Scam

3) Financial Analysis

4) Business and Industry Analysis

5) Valuation Analysis

6) Management Analysis

7) How to generate stock ideas?

8) Stock Investing Pledge

9) When to Sell the Stock

Meet Your Teacher

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Gaurav Khullar

Professional Banker(10 Years Experience)


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1. Introduction: welcome to this amazing course on how to eliminate loss and profit consistently in stock market friends. Most investors often t stock market with huge losses and medicine. My like stock market is a place to gamble. Stock market is controlled by operators. Money can only be made by insider trading at sector genetic. But most people fail to realize their own mistakes, their own inability to learn and often relying on people for investment decisions. This course is for retail investors. That is, people like you and me who are engaged in different full time jobs or businesses or any other source of income and invest small amounts in stock market toe. One passive Ingle Even if you are a full time investor, you'll get lots off new strategies and eye opening facts, which you can implement to refine your investment process in stock market. This course is not about typical definitions and issues or formulas. Villain. Everything with common investor psychology and thinking in my yes psychology off small investor is very different and large investors or big bulls. This sticking or loss absorption capacity is also different. The specialty of discourses that it will take you from bigness level to export level in a step by step manner. You don't need to understand. Be a bid. Are free cash flow intrinsically or any other times to start the schools, and only thing you should have in your mind. Is that how to eliminate loss? And how can I profit consistently in stock market friends In ordered willing red laws, you need to know why people lose money in stock market safety is indeed better than cure, so it's better to know the reasons why people lose money in the market, then to invest your hard earned money and later seek ways to exit. Hence, we will first learn various reason for losses off investors and bust various myths related to stock market. Next, we will see interesting moves through with the retailer. Small investors is trapped by the so called manipulators off the stock market. This lecture provides interesting as well as eye opening insights into the modus operandi off various camps currently happening in stock markets all over the world, and how the trust off innocent investors is being broken by the fixed stock market analysts . The motive of this is to make investors cautious with strategies being used and remain vigilant after among the traps laid down by various negative elements. We move on to the stock selection framework. The first is financial analysis. The aim of this exercise is to find companies which have held the financial position on offer potential for future groups. Here you will learn how to do financial analysis off a company and my new This will not be a boarding to article class off issue and analysis, but with practical case studies. We will Lunder perimeters in a really interesting way, most off one analyst for where this topic off elevations in a very complex way by use off complex excel sheets and complicated calculations, Common Investor is lost in these confusing formulas and rely heavily on analyst for their forecast. But we will mix fundamental with technical analysis to know went to buy the stock and make our own valuation model. This lecture is also very interesting, and you will learn new ways to analyse the stock and find entry points to buy. The stock stock market every year gives entry points, but most investors are so much lost in ups and downs off daily stock price movement that they're confused, went Wender and went to exit the stock after evaluations, you will learn business and industry analysis. This will involve analysing the current situation of industry and finding the strength off the company. That is what which will enable faster growth of company in contrast to its competitors. Here, you will learn how to find good stocks within a particular industry, which have potential to make your money grow exponentially. You will learn various interesting tips n tricks to do the analysis. Most of the strategies are practical, and hence you can employ Wendy's without going into the technicalities off financial statements. Then comes the most important part off over course, that is management analysis. Future off. A company is highly dependent on management friends. It would be extremely dangerous if you rely solely on the numbers and valuation alone for purchasing a particular stock. Sometimes he dismally to value crops. This stage will confirm over decision off choosing a stock after financial business and valuation analysis. Management analysis is the most important yet most ignored part by the investors. This is one part off analysis which most investors run away, but it is very difficult for a common in Western judgment, and when being an outsider, you will step a step plan. How to differentiate a good management with a dishonest management. Next we will look are generating stock ideas. There are many good stocks about which we haven't even heard. So in this model, you Verlander screaming funnel, in which we will separate Diamond from calls being a common investor, it is really impossible to analyze every stock listed in the stock market. Hence, we develop what was start screening funnel to eliminate many junk stocks and focus our attention only on damn wins moving towards and off this course, we will sign our investment pledge. This model is important and you London investors psychology and how to give yourself to the ground in the days of bull market and how to give yourself motivated in the days of beer. This pledge will change your outlook towards stock market and keep your emotions and greedy in control. At last, you will learn went to sell the stock, since no one can time the market knowing rental cell is equally tough decision as buying the stock, especially since greed usually takes over and you are always seeking a higher price. In this morning, we learned some out of box strategies on how to exit the stock without losing much money. I also added some bonuses to the schools, which you can check out on the last. Those are indeed special where I have demonstrated my buying process using new dip, moving every strategy. This is a new strategy where I have combined for number until with technical analysis to find the entry points and that you using just a single moving average on price. This is not like the crossover strategy which you've seen various books which tells you to buy when moving average crosses price. That's strategies suffers from which shows and that is side with woman of the market. But our strategy reduces lost to a greater Western and helps us increase of a profit margins. In this bonus, you master the art off entering the stock at the bottom vanities available at cheap price. Next bonus will guide you to check the financial standoff any company use inject list. It's easy to find the financial health, and I have also provided the actual shit with the help of which you can just feed the data and yourself calculate of financial health off any store off your country. Next one is includes how to check the failure off a company here. I will demonstrate to you how to find early warning signals. Julian Vendor Fundamentals off company have deteriorated, and it's time to warn again I will give you Excel Sheet, where you can easily check if the company is going to fail or not. Next, bonuses. Finding earning manipulations. In this bonus, you learn how to find out whether the company's manipulating its earnings or not. If the company's indeed many birding its our necks, then the investors money is not safe, and you should immediately exit from these talks again. I would ask Execute with this bonus to, and you can easily find the onyx manipulation by simply feeding the data off any stocks in your country. So, friends, I welcome you all to the scores on how to eliminate loss and profit consistently in stock market. By the time you finish the schools, you will be a change and much improved investor and can analyze any store within 15 minutes . Does taking your investment decisions more confidently without any help off your broker or friends or even business news channels. So friends, if you are an existing investor or thinking off investing in stock market or a person suffering from lawsuit and stock market Orting stock market, other place where you can only lose than this course is for you all. I am super excited to meet you all in the opening lecture of this amazing course and help you increase your profit margin with some great strategies and step by step stock selection process, along with knowledge off how not to fall in traps set by from dishonest people in the stock market. 2. Why common investor looses money in Stock Market?: welcome to this open nature of Michael's legacy. Y the retail or small investor loses money in stock market. And what are the Mets? Retail Investor rules regarding stock market Most regard Investing in stock market at gambling. This is normal perception off a layman regarding stock market on the only reason for staying away from stock market. If this is so, then why no billionaire from casinos? But we can see millionaires and even billionaires from stock market. Beat Warren Buffer B. Tolins on Even billionaires like Bill Gates, founder of Microsoft or mock clickable, formed off Facebook, who made billions while listing their company in stock market. Had stock markets being a gamble. Then you could find gamblers indigenous people. But in fact, you can't find a gambler in Top 52 just people in the world. But you can fight many stock investors who turned their fortunes from stocks, so investing in stock market is not a gamble. It is gambling on Lee for those who invest without proper guidance or who invest based on broker steps without using their own analysis and reading for buying the stock in the famous book. Where are the customer job French. You'd successfully explained the reasons why investors are mostly a clause in stock market . In short, a man was on meet, and he sees many yards. No, this man asks his friend, Who's your certainties? Friend replies that these are the jars off bankers, brokers and company. See? Use. This man says that it's fine, but we're onto customers. Your So the meaning is simple that bankers and brokers comes to you saying that they will make your money grow hands. I really these Yours should be off customers and not all bankers and brokers. But only bankers and brokers and company CEOs are making money and not retail investors. So the point is, wherever you Lou, the customer or client or investor can never make money. If you are dependent on your broker banker friends, your Facebook group, your watch several or business news channels, you need to remove the dependency in order to succeed and make profits and stock market. Dane and Dale News and view more there. Floating in stock market also reacts to these news on drawers, but how you should react toe. Every piece of news is the only thing which will make you the horse off longer else, you would also leave the market with the same opinions or stock market. This casino No one can make money in stock market. Strong market is being operated by the oh Cueto's blob line. Block friends into returning to the short short were to lose your heart on money just such . And you can't find a single billionaire who made billions from Internet really so intraday trading Swing footing is nothing but a form off gambling. More what your broker will tempt. You take sharp ratings as only when you prayed more. He's earning his commissions and earning his yards. In fact, fundamental growth investing is ideally suited for retail. Investors who have Dangel or businesses on wants to generate wealth by investing in stock market. Most retail investors fallen prey for Internet trading, which requires time, that is, you need to be on your toes holding in penetrating. You need to get most off your decisions correct before starting making money. There is no greater in this world who gets every call correct. You need to continuously of their charts. Keep track on indicators, which is almost impossible for retail investors and for nominal growth investing. Even if you choose 15 to 20 stocks and sit tight with them, you can create really built along with your job and your business. So are you one of these asking Facebook community for stock? Stone Western are asking views off people rather than using your own logic and readers to buy the store. If that's true, then you are bound to fail in stock market. And these are the people who regard stock market as a place off Campbell. Most of Horn. You will receive the messages like these every morning before opening the market, giving you tips on motivating you to create. But the best place for such messages is indeed your rejection balls or the block list that you won't receive these messages again and again. After the scores, you will become a confident investor on you. Make investment decisions based on logics without taking help of these messages, most after databases like name and phone number is shared online by your calm providers or even investor himself who fall in pre for free stock tips and become member off various groups, which are in fact being run by operators on giving free creatives regarding penny stocks, which are very easy to manipulate. Most people fall in love with price of the storm. So many stocks, which general trade at very low price. Our favorite off operator's toe crab, the innocent investors. I would like to complete this lecture with a court off Magic offered, which tells about why trading or short term investing is considered gambling. The court goes like this. Once you learn the basics of value investing and start to see the compounding effect on the returns off your investments, any other investment approach would seem like gambling. 3. How common investors are trapped? Stock Tips Scam: very complete this morning in this model. Vivid. See how innocent investors are trapped to electronic media? Beat Facebook or what's up our messages. We will also see what is free or paired. Stocked up scam. Social media is filled with so called stock market exports running their free and paid stopped up So we will see how this works and how they break the trust off investors as well as cause loss of capital to the investors. Are you one of these who often post on social media like this, asking for stock recommendations or ways to invest your money? If the answer is yes, then you are one of the targets off the so called analysts. Stock up for fact physical. What's up? Snapchat email and especially your phone number by the office. Imus is most common way to crab. The innocent investors, most off one. You would receive the messages on various social media platforms like this join our five day free trial for Internet tips and on big returns. We have developed highly accurate reading software. Join and see yourself for 200% rhythms. Isn't it too attractive? Yes, indeed. Notice that free word in the capital letters also know down the 200 person returns. Word that's doing all the tricks. What free has the power to attract, even toe the people who are not even interested in stock market? Will you take this offer most often, Jess. You You'll Childers, especially if you are one of the guys who often ask those for investing in stocks and depends on brokers on many others will simply and roll just to test how it goes. Obviously. Five. This retrial. You have no loss more suited investors that trap seeing the free trial off us and join immediately. One thing more. Many are even surprised how we're getting messages on your number and you don't even have some strapped to them. Well, that's too easy. Most receive SMS and emails from database for chairs from different agencies very controlled. So selling your email I D and four Numbers is also a business going on these days. Now, suppose one off over 50. She's character Mr John, also got attracted by this advertisement. Our message. John Joseph Crime Book is free trying, and suppose I float this advertisement off free trial, and this attracts around 10,000 people. This number is too few friends seeing the reach of online media. We take it just, for example, with that Frida it is easy to attract. Even people who are not even interested in getting these calls does by self driving tow this five day free trial. I got 10 toes and phone numbers and email addresses. So here goes my five day free trend. Day one. John received a message in the morning itself before opening the markets on The message goes like this. ABC Industries will move up today by ABC Industries for gains so over John checks. Rather, this is really a good call or not. He observed that ABC Industries really moved up, but he doesn't did the trade. He's not bad, confident on balls or he's just checking whether it actually works or not. But the whole world, he two things or that's just look, let's see tomorrow. Ditto. John again receives a message. ABC Industries will move further up by ABC Industries for gains again. Our Joan is bit confused rather to pay the trade or not. Handsy again refuses to take the trade on, sees that he lost on some gains hard it took the trade. Um, opens. Every person would again think this as sheer luck and won't believe Day three. John receives message in the morning. Everything industries will move down. Short selling gain handsome profits. Jon sees that everything industries actually go down, and he holds his head thinking he lost good profits. Had it took the trade on the last two days, he's not thinking off taking the next goal dear for John, as usual, received a message. Eva's Industries will move up by four entered against. By now. His fate in the calls is getting, and he took a small bit. He won't ask for the message in markets. Also, ABC Industries rises and John is happy. Seeing is money advising Dare Fire John received the message. ABC Industries will fall. Sell four interna gains. Our John is no super confident. He sells. Asked for the call and games 25%. Profit is too happy and super confident in the calls. On the other hand, he's thinking that he should have toe big trades and nor the small one. By now, free trial is over. On next morning, he already received the message or mail to subscribe for prayer services. Good morning. Your free trial is over. You just see how liquid we are. This is not easy in stock market, but we developed the stool with years of practice and hard work and roll for our premium build services. On March, your journey to riches, our John could go relate to what suddenly meal. He just saw the magic last five days. He and all for the paid service is on paid big amount for one year subscription. He's super excited to start his investment journey toe billionaire on even thinking to quit his day job on become full time traders so over, John is now dreaming of becoming a billionaire on seeing himself as next Water buffer. He has strong belief in premium services on he gets ready to start the reading very nasty, with some big trades from next year. He started receiving calls in the morning as usual, but now he always loved that. Out of 45 calls, only one or two were working on. The rest are false calls. Some days, not even one is working. He surprised thinking. Now I have subscribe to the premium services I should get better calls with big profit margins. But he had so much confidence, not edict all the trades asset. Soon he started moving his money, and after a few months, he, our devotee, lost all his hopes on regarded stock market as casino. Yes, With such expedient and stock market, anyone would see stock markets as a casino or a place to gamble. In fact, John was a victim off stock tips cam, which is happening in every country around the world. But how does work why, During trial period, there was 100% accuracy, and after subscription, the accuracy dropped to 2030% or even 0%. Some days, in fact, with Baird services, he should receive more premium calls with bigger murders. Actually, I never gave John 100% occluded calls. I simply used a B testing matter, and John accidentally happened to be my victim. So this is what happened with John. You remember I had 10 thousands of travel list who subscribe to my free trial. So on day one, I send 5000 subscribers Ah, Baikal and rest five total subscriber. A cell call full. There are only two options and stock market I that ABC in the Street Will Rice or it is in the civil fall, even if the industry's rise on Day one on five thousands of tribals shown with Green Box, God Correct Call and Our John was among them. Similarly, on Day two, I sent Bicol toe 2500 subscribers out of 5000 who want the correct call on Day one and other 2500 subscribers. A cell call but I Zoff, ABC Industries rise on Day two. Also so 2500 subscribers, again shown with Green Guard, the correct Call, and John again happened to be in that group. On Day three, I sent bike or to 1250 survivors out of 2500 subscribers and other 1250 self styled Selkoe . On Day three, I sent Bicol to 1250 subscribers out off 2500 and other 1250 sub styles a cell. Call the price off ABC Industries for On Group, which received a cell call Profited, has received the correct call again. I retained this group and remove the other group on. Therefore, I sent by a call to 600 indifference of drivers and sell called the Rest 625 subscribers in stock market the price off everything industries, rules and the group which got Bicol received the correct call. So I picked this group and drop the other group like this. On all five days John happened to be in the group off subscribers, which received the correct calls. The beauty off this strategy is after receiving one wrong goal does off. Kreimer does not receive the next car, which are shown by the Red Group so that this fine day free trial 312 off drivers shown with the blue box off 10 thousands of drivers guard the correct 100% calls. And they are a form believe that this particular form gives 100% accorded calls and has these innocent retail investors are trapped, these 312 Parker subscribers have actually seen the magic. Last five days, All these traders or investors were suffering huge losses, and somehow they saw Ray of hope, this all someone who could provide correct calls. So this is nothing less than a magic for them. Their confidence on form giving the calls have increased. Suppose you are asked for $1000 annual subscription fees on Imagine. Out of 300. Well, he won a fifties of tribals and roll for the paid services. The person giving these calls is making a whooping $100,000 annually and that to what? Cheating innocent retail investors by giving calls that have no logic like this. People are trapped by 10 15 anyone 23 tiles. Just imagine investors getting tender acquitted calls. What psychological impact will be undermined? Friends. Motive off the scores is to make you confident. Investor on again nor falling prey to such camps. Day by day, scamsters are finding new ways to cheat innocent investors. My motive off making the scores is to help you take your own decisions confidently so that your hard earned money is saved from such tips. Camp and other day to day scams devolving in stock market. Let's start over journey towards avoiding loss on developing about step by step strategy to win on profit consistently in stock market by and of this course, it won't did you more than 15 minutes to analyze any stop on these 15 minutes are much better than spending Congress hours on Facebook. What's up, Snapchat Groups asking for stock recommendations. 4. Financial Analysis : Analysis of Income Statement: Welcome to this lecture in this lecture. Visible Study Analysis. Off Income Statement Income statement rewards detail Off Guard Rolinco that the company has are in a year it is also called top line income Statement provides details off all the expenses the company has incurred toe on the top line. It also provides details off taxes the company paid to the government authorities. The part of Top Lane, which is left after waiting all expenses is called net profit, or bottom line in sharp income statements tells us how much revenue the complete generated during the year, the expenses incurred to generate the revenues on the taxes and reputation. Our typical income statement or profit and loss statement looks like this. Pause the video and simply off the various hurts, nor the top line, which is represented by totaling go on bottom line, which is represented by net profit. We can, although that total revenues have grown by 17,962 million ₹2.21,320 million, which is a very good growth, off around 18%. Also in same period. Net profit or profit for the year has grown from ₹2315 million toe ₹2662 million which is a growth off around 15% which is also held. The group Let us see what parameters we need to all the while analyzing an income statement . Generally, we look four perimeter only 1st 1 is sales or revenue growth. Second is mayor of profitability. Third is tax analysis and four twos. Interest coverage sales for revenue growth is the first thing every investor should see in any income statement. Money received from the sales of item is generally recorded under decide hands more the products or services the company sells higher the sales or revenue. Investors should look for companies having sales growth off more than 15% or 3 to 5 years off region. If a company is growing constantly over repeated off 10 years, then it's really a good company. Let us take example off Asian bones. We see that sales off the stalk is continuously increasing over the petered off Mendis. The 10 year sales growth is around 15% and five year sales growth is around 10%. Who just good sign on investors should carefully study the sales pattern over the years, and any depend sales should be analysed deeply. One of motives. My negatives can be ignored over repeated off 10 years. Also, you should completely remove all those talks from analysis. We show huge variants and chills. No need to even go further for analysis. There are tolerance off stocks and stock market. You can focus on some other stocks. Next, perimeter don't look out and income statement is profitability. Profitability is measured by opium, that is, operating profit margin and NPM that is net profit margin Operating profit margin measures the portion off sales income remaining. After deducting operating expenses, we can calculate operating incomers revenue or sales minus costs. So good souls and operating expenses operating profit margin is one off the great parameters to deter mine. Whether a company is a low cost producer among its competitors or not, the formula is simple. Operating profit margin who just calculated as percentage is equal to operating profit divided by sales multiplied by 100. A company with sustainable growth will have a higher operating profit margin down its competitors next. But I matured to analyzes net profit margin. Net profit margin denotes net profit that remains after the company pays all expenses, including interest, depreciation and taxes. This net profit margin shows how much profit our company makes for every dollar or every rupee off sales. This is the number most companies highlight in their annual reports. It is important to compare net profit margin with the industry against its competitors or moderate with industry average. The company, which has higher profit margins, face the beer markets more strongly and are less affected by day to the market troubles or manipulations. And investor should see operating profit margin and net profit margin greater than 12% on a year on year dresses. Well, actually. Example. Office talk, Procter and Gamble and calculate operating profit margin and net profit margin and see if the stock passes over, check or not. Lexie. The income statement off the stock to calculate operating profit margin. First, we need to calculate operating profit, which is calculated by removing operating expenses from sales to calculate operating profit margin. First, we need to calculate operating profit, which is calculated by removing operating expensive showing red boxes from sales. Hence we get operating profit as 152 194 for the year 2008. For the ease of understanding, I have put a B, C, D and so on against every entry in this example. So from the other Excel sheet, you can calculate operating profit as a minus B plus C minus d minus, E minus, F minus 30 and minus. Such and so operating profit margin percentage can be calculated as operating profit divided by sales, which is equal to 1 52.94 divided by 6 42.96 multiplied by under, which gives 23.79% for the year 2008. Similarly, net profit margin percentage is calculated as net profit and divided by sales. A, which is equal to 1 31.41 divided by 6 42 196 multiplied by 100 which gives 20.44%. Similarly, you can calculate operating profit margin and net profit margin over the years and v c there. This talk has constantly went in both operating profit margin and net profit margin above 12% levels, which is a sign off handy growing company friends are company with sound financials and Healthy group will ever fallen malpractices off tax evasions. Always seek that taxpayers off the company and see if it means the norm set by government or not. For example, in India, the corporate tax rate is 30%. If you see the taxpayer percent is too low, then the reasons for the same should be analysed. Actually, this is a red flag on a point of concern tax. It is calculated by dividing taxes by profit before tax. It should be noted that if tax rate off any stock jumps up and down Gironde year than the company may be generating earnings by playing tax loopholes rather than selling more girls are services again in case of Procter and Gamble. The tax it is almost 30% which matches the corporate tax rate hands the companies paying taxes. As for government norms, and it's no choosing tax loopholes, this is indeed a good sign off a healthy company, the last parameter to analyzes interest coverage. This is also for that service coverage issue. This is important for companies who have taken that diss players whether the operating profits are sufficient to pay interest to the lenders or not, interest coverage issue is calculated ours operating proper, divided by interest expenses. Ideally, investors should look for in dust coverage ratio, at least for that is for every ₹4 off operating profit. The company's paying of ₹1 as interest on interest coverage ratio less than one is an indication that companies nor generating enough cash to page interest obligations. Let's see example off a stock or hard cold. As you can see, the interest coverage ratio is decreasing and has this is not a healthy same. Also, with that increasing, this is not a good sign for any company. Investors should and lies more before investing in such stocks were interest coverage ratio is decreasing. 5. Financial Analysis : Analysis of Balance Sheet: While the income statement gives us information pertaining to the profitability off the company, the balance sheet gives us information pertaining to the asserts liabilities and share Ola security at a particular point of time. In the eyes off investor, it denotes the current financial position off the company in the battle, and she tells us how much the company owns that others assets on how much the company goes . That is, it's liabilities on the difference between these two is called equity. Let's see the balance it off. Hero Motors, one of the leading bike manufacturers off India. Please note on the talk that balance sheet is always on a particular date rather than for a fixed Peter. The item shown in the red box are the assets of the company. These are the items with the company owns the items in the blue. Other liabilities off the company. These are the items which company holes. The remaining item is the Shareholders equity, which is shown in the yellow box. Let's start with the discussion off equity and Liabilities. We will get an overview off each entry in the balance sheet in a layman language. Soeder. We can understand rich entry means work. And what is its importance? We won't going toe the accounting part as investors Job is not to know how each entry is recorded. Investor Job is to know what numbers to look out for when reading the balance. It 1st 1 is Cheryl less Fun. This is commonly known as equity equity. Simply the money shareholders would end the company. This takes two forms. Generally share capital and reserves and surplus share capital. This is the money investors invest in the company asked, but its face value. Example. If a company issues 100 shares off face value at Pakistan, then share capital will be 100 into 10. That is released 1000. If you see a rising share capital year on year than this means that companies consistently diluting shares on this is a point of concern. Friends know down the checkpoints. I'm telling you at every step in the schools you will learn many Montreal's like these. Next is result himself. Plus Dis refers to money Company has raised inform off share premium, which is allocated for from future business spending, plus the profits which are V in Western in the business. After paying dividends there's over, basically allocations that complete makes for specific future needs. Next entries. Non current liabilities. Nor can it. Celebrities are made up off three parts. The first is longer moorings. These indicates loans border or from banks for long terms, generally for more than one year. This is very important number. Companies that have a high level of warnings are likely to face more problems and often face difficulties during the time of crisis. Therefore, tax level. These This is a tax liability, better company goals, but does not pay at a current point, although it will appear at some point in the future. In simple terms. No for tech celebrity is the provision for the future taxation, and it arises due to the timing difference in the value of asserts. As for the balance sheet and income tax, ER, the main reason for a rising off deferred tax liabilities is the treatment off depreciation . Then comes long term provision. This is the among a company sex aside for the province off things like and Cashman, Graduate e and other employee benefits. So company makes provision for all these future expenses. Next, enter use current liabilities. These are all liabilities off the business that are, too, who settled in cash within the next one year or the operating cycle of the given for the current I ever did include shorter moorings. Hero Moto Cop has no sort of morning, but we will learn what a shorter morning is. This is a bank credit which needs to be paid off in the short period of time, usually within one year. This warrant is usually made to meet the daily operating expenses. If this number is larger than the company's cash, any Cuban and then the company's not in a healthy financial position on the company does not have enough cash to pay. Short term tax does, even if the company is that we could issue less than one. But if short numbering is the better than cash and equivalents than the financial position off, the company is not good. Next entry in current library this straight people's there are also scored account peoples , and this is the money all by the company to the supply lines in layman terms, in how awful we have seen electricity bills, telephone bills, newspaper that spectra, which we take the services now and pay them later. Normally rising on people's is not a downside. I such because the company can use its own funds available for longer, Peter went. Invoices are paired later. Other current liabilities, all other liabilities nor covered under above two comes under this. We need to look up shoes for more details regarding other current liabilities. Lastly, we look at short term Peruvians again. We need to see the North or the she deals to learn more about short term brilliance that the company has done for future expenses. Lexie, a sex partner as sort of the other Ballantyne side of a balance sheet, asserts our water company owns. These are simply resources held by a company, which helps in generating the revenues. The first country in the asset service, non core investors. This includes long term fixed assets, which are important for the business and thus does not move in and out off a company for day to day basis. Example. Long term investments, figs, efforts, goodwill and other intangible assets. Remember that assets owned by a company is expected to give the company a long term benefit over its useful lifetime. No, not study known current asserts in the deal. No posters, figs efforts. This includes tangible efforts. Intangible efforts on Capitol work in progress. The first is tangible answers. These represents land, buildings, vehicles, factories for nature's and a cook wants at a crap for more additives, the investor can see the shed. Yule off, Tangible asserts in Danube Lessers. These are the assets net conduit, touch and generally can be turned into cash. Example. Goodwill Trademark and copyrights Last entry in Fixed Asset Er's is capital work in progress. This means any work like construction work not completed and the end of the financial year . The capital work in progress is a war that has not yet complete but very capital. Explanation has already been in court Once the construction workers computer acid is put into the use. No, this asset is moved to the transgressors from Capitol Working. Focus. No, let's see. Non current investments are long term investments. These represents the money in Western. Either borns are stalks off other companies for more than one year. Next entries. Definite tax assets. This is basically in access tax that company has paid on, but I just do the timing difference in value off assets. Ask for balance sheet and asked foreign contacts norms. Then comes long term loans and advances. These are loans and advances which company has offered to his group companies and it expects to receive in more than one year At last we have other known contestants. You need to see the she deal forcing other non gonna asserts with the companions. That's no food goes on current efforts. These are short on the nature, which are actively managed and tied to the current level of business. In simple terms, the current efforts is the blood of the company, and nor contestants are the body through which it circulars good in deserts on the asserts that can be easily gonna want to to cash on company consumes within one year. The current desserts include investments in one trees, cash and cash, secure and short term loans and advances. And Sunday does Letty one woman. The first is current. Investments indeed includes all investments, which are maturity within one year. Next comes in one tree. Inventory includes all the finished goods manufactured by the company, raw materials and stop in 20 their goods at various stages of production and hands have nor been sold inventories are especially important to watch in manufacturing and retail forms. It is off less importance in companies that sell services, then come straight receivables. These are also for Congress, evils or debtors in some balance sheets. District Prince, the amount of the company's expected to receive from its customers clients are distributor's off related parties. If receivables are rising faster than sales, this means companies reporting more sales by offering longer credit terms to his debtors. This is a common way to manipulate by reporting longer sales to longer credit terms. As an investor, we should always compare trade receivables and sales to analyze the trend off sales manipulations. Next, use cash and cash to Williams. This is most liquid as it found on the balance sheet cash completed off cash on hand cash. Poland are short term, highly liquid investments, which are maturity and less, and Freeman's Dan comes short term loans and advances. These are the loans which are to be repaired within one year. At last we have other current efforts and investor needs to chapter she dual or the lords for seeing the current assets. Other than all of double the most important Madam we just to analyze in a balance sheet are that could issue and current issue not only could issue measures the amount off total debt capital with respect to totally equity capital, it is calculated as totaled up, divided by total equity. Many investors use longer unders, but it's better to use Total that beauty off. One used at 50% off farms are brought by the shareholders. Andi remaining 50% of border from the Lando's. That'll be Kuti greater than one indicates high leverage and hands. Investors should be careful. Ideally, investors should invest in companies having on deck less than one. This issue is important because during bad times when the profits of the company disputes, even then, company has to pay its lenders excessive can lead to bankruptcy. And this wait order entire shareholders will so investors should stay away from companies having hired there. Let's take example off Issue Prince, one of the top stocks we get that we could issue by dividing total rhymes with total share all those phones, just although how the companies reducing and maintaining its that we could be below one, and this can be seen from the performance off the completely this talk is giving. Year on year could returns along with good dividends. With Cheryl US. No. Let's discuss current issue. It is used to test the company's financial strength. Took it remind its ability to wait short of obligations. Coriander issue is also called working capital ratio. It is measured as current assets do, ordered by current liabilities. The current efforts are the assets that are consumed within next one year. Also, the current liabilities includes people's within next one year. The current ratio greater than one means that company has enough assets to meet its near term obligations. This ratio becomes important for growth companies. These companies have to be liquid enough to withstand any crisis. Investors should always seek. For companies having current issue greater than 1.50 let's again pick example of hero Motors. And the current desserts are calculated as the total off this hurt. Does he get total kind of a sex have 5555? The current liberties is calculated as total off this hair. It doesn't get total current liabilities at 4 4423 hands. Current issue is calculated as 5555 divided by 4423 which gives US 1.26 and its current ratio of hero waters is fairly good bad 1.26 levels. 6. Financial Analysis : Analysis of Cash Flow Statement: welcome to this lecture. Ask For many investors, National statement is the most important statement to analyze. Most investors analyzed cash flow statement First to see how much guys the completion rating on then we want to. The balance sheet and income statement Analysis. Cash flow statement basically throws light on the cars, generating unity off the company. This statement records the actual moment in cash in an accounting. Peter. All the cash you see guarded inflows by the company and Sprint, that is, outflows by the company will be shown in the statement. The national statement showed the true cash flow to and from the company during the year as the cash flow statement removes all the North cast items such as deputation that we see on the income statement and tells us how much cash the company has generated. The national statement consists off three sections. The 1st 1 is CE fel that is cash flow from operations. See if I that is cash from investing activities. The 3rd 1 is CFF that is cash from financing activities. Let's start with the discussion off CFO see afforded his cash flow from operations is the cash received appeared by a company in the course over. It's a regular business during a specific period of time. A strong cash flow from operations is a good sign off her company's health, not a calculates earful. The net income or net profit is taken from the income statement. As you know, from chin off cash flow statement is to track the actual moment off cash inflow and outflow for business. Since depreciation and interest expenses do not involve any movement of actual cars, these loans are added back to the nothing camo. Very. These are initially deducted toe arrive at net income. After all, necessary addition and subtraction. We finally arrive it operating Castro or not cash flow from operating at duties. Next to see if I, the Castro from investing activities, investing cash flow are the cash received or paid out by the company associated with investment items. These can be investment in publicly traded securities, investments in other companies or investment in assets such as property, plant and equipment or fixed assets. The particular property plans in a conference is also called the Capital Expert Nature, or KPIX. The National Home Investing Activities contains the cash in and also is connected with the investment and disinvestment in long term measures. The capital expenditure for property plant and equipments here shown s purchase off figs Assets is the single largest and most important entry in this part of casual statement. The investment have shown with negative sign as money has taken out of the business. Similarly, the descent investments are shown with post of science. As money is brought into the business, they're disinvestment should be seen critically. Whether investors, as the companies selling asserts on investor, should find the reason why the companies selling assets. Finally, we need to analyze Cashel from financing your duties as this is the part which deals with the work passive Ingo Not as do gooders financing cash Marshall's money received or paid out by the company associated with this capital Asian as in this example, the company's increasing dividends and also decreasing borrowings, which is a sign off good company artifically a cash flow statement. Its creator because investors need to know how much cash and cash Ikuo and his left and then this figure is founder the on and off cash flow statement and have an investor vision always look out for companies where this figure grows year on year. But Southern decrees in this figure should raise your eyeballs. Uh, you should look out for the reasons, maybe the company, that summer conditions have appeared out. Higher dividends Does an investigation for custom companies vision rate good amount of cash flow from operations that can take care off their requirement for investing on the repayment of that? That is CFF, a company that dream company who is left with surplus cash after taking care off Castro from investing, and Casper from financing activities that is CF for Does. If you find CFO much greater than see if I plus the effort, then indeed you have Follow Casco Never leave such companies. Still, the fundamentals remains him. You actually an example of his talking maternal eyes. Here, CFO is 13,610. See if I is 176 and CFF it's down Told and 77 Does. CFO is much redundancy if I plus E ever the show's Dardari surplus cash and this indeed in the sign off a healthy company? No, actually another example. Efficient pens, a unique paint manufacturer off India issue prints has been done reading good amount of cash from operations year on you. CFO is increasing continuously from 2000 and 8 to 2000 and 17 that is 10 years of robust brought. You can also see the expansion plans Ovation paints shown, whether negative, see if I but still the company's and reading positive free cash flow, which is indeed a great sign off a healthy company, does. Did his ideal mix off expansion and growth, and investors should always look for such companies, which are growing as well as expanding. 7. Golden Tip- CFO Vs PAT: very come to this new session. Just appalls urine and grocery store, and one off your regular customer is short of money and you let them buy on credit. You are therefore creating sales, but there is no incl off money. This means that no funds are being generated toe by New Roma deals or celery off employees or other expenses. So here comes another important parameter that every investor should check that is, back and see earful Bad stand for profit after tax and see if we have already learned that its cash flow from operations. So as we see the grocery store example, when a company sells a product, it might will receive the payment in the same year. But accounting standards allow the company to report that cell in the same year in the income statement. But the money received from buyer reflecting CFO only even received has there is a difference in part and CFO for that year. But over the years, the community part and CFO should be similar, or at least community part should not be less than communicative. Fearful if cumulative CFO is very less than cumulative part, this means the companies not able to receive its payment from buyers or this means the profits are fictitious. Does investors should award the company's if the cumulative CFO is very less than cumulative packed? Let us example of a stock Asian paints. We see that issue. Friends had profit off 10,887 violet collected and 1009 158 s. Castro from operations. Does the cumulative CFO is getter than cumulative part? And this is a sign of a healthy company that's cumulative Patents here for can show you the inner weaknesses and held off any stock. If you think cumulative fearful very less than cumulative park than straight of everyone that stock from your analysis and you don't need to go ahead with that stop. 8. Free Cash Flow : Ultimate measure of stock's true worth: welcome to this lecture on free cash room Free cash flow is indeed the true measure off any companies health on the future off any company depends upon Harman. Free cash flow is car companies, and writing free cash flow is indeed the David Matter off company strength. This is basically surplus cash that the company is able to generate for shareholders, not is equal into the saving for household. Just imagine how savings are important for the household. More the savings battered in the financial health. If a company has no free Castro, that means companies spending beyond its means. These kind of companies generally go for that pledging or offering new additional shares, which leads to a decrease in profitability off a company or bankruptcy if a company has posted free cash flow. This means that the company is self dependent and can go for expansion without borrowing money and can create more value for shareholders by giving more dividend or offering buybacks. Generally, new companies are growing. Companies has left free cash flow because off expansion on investment in plant and machinery. But over the long period, the company's sure gendered free Castro free cash flow is calculated as FCF physical Do see a four minus k pax We're fcf its free cash flow As we already know, see if boys Castro Home Operations and we're KPIX is the purchase of property plants and two prints the capital expenditure and lose the maintenance KPIX on also the capital work in progress. The KPIX for any year canonical illiterate has difference between the grass fix assets. Placido Blue i p at the start of the year and and the end of the year does weaken rate KPIX as grass fix as it's plus CW appeared to start minus GfK placido ap at the end of the year . We can also write kip Exercise not for exited. Placido do appear to start off the year minus and FAA Placido blue AP at the end of the year, and then we ended F decision for that year. And investors should always calculate the FC of person days. That is free cash flow divided by CFO to measure how much free cash the companies in reading. If free cash flow percentage is greater than 25% you have a need Fonda cast call, and you should stick with these talks also investors who toward the company that Cape Access to High and FCF his negative. This means that companies consuming more cars than it is generating these types of companies often depends upon borrowings pledging and shared delusion to meet their excess spending. Legacy Free CASTRO Percentage Off I. D C. LTD. As you can see, this company generated free cash flow 45,819 over the years and does the free crash photos here for his at around 28%. This is very good for any company, as this company can do. Expansion plans without depending upon external borrowings on this is very good for any investor. 9. Measuring Operating Efficiency: rape. Until this lecture, you let us move forward with our analysis framework. In this lecture, we will see how to murder the operating efficiency off any company we can matter operating efficiency off any company with a falling tree perimeters. The 1st 1 is in 20 don't over issue. The second is it issue of all days and the third is fixed asset turnover issue. Let us see each of these parameters in detail in 20 turnover issue off accompanied. It reminds the frequency off sales happening in a company. This ratio also suggests how efficiently and quickly the management is able to convert its inventory into sales and how better than the company's able to fulfill its or their own time. Never see how idea is calculated. Idea is calculated as sales divided by Origen went to get start on at the end of the year. Higher idea indicates that the company's able dodo taters in 20 faster on its capital is not stuck in inventory. Investors will also see that year on year idea should increase our remained stable. A low idea indicates that the company's inefficient in managing a sales on that the company's incurring a high storage post. This also means that sales are poor and there is access and went in line with the company. Let's see an example here. Show the sale than in 20 off the company. Let us calculate idea for the year 2000 and nine, which is calculated as taking sales that is, 15,611 on the wedding, with the average in one tree that is the average of 4050 and 4599. Hence we get cheap 16 As invent return your that is, there are 3.6 in 20 times for year. This means that this complete mutate well divided what 3.6 starters, 3.33 months to sell and replace all in one trees. Also, for the year 2017 the company replaces its inventory and 12 divided by 409. That is, in 2.45 months. Does the company now replace over its inventory in just 2.45 months? Also know that over the years idea for this talk is stable at around four, which is indeed a very good thing. Next on our focus on the receiver, where it is that issue of what it is. Also all the average collection bigger the days, obviously well outstanding reflects the average number of days in which the customer off any company pay their dues. Hence, this parameter shows how well the company can collect the cash. Former customers. The sooner cash is received back or collected, the sooner this cash can be used for the operations. The civil days is calculated as average account Greece you want doing start and the end of the year multiplied with 3 65 and all this divided by two steals. Gironde year receivable days should be decreasing, or at least constant. Both liquidity and casseroles increase with our Lord days off. The serial outstanding increasing residual days moves that companies not able to realize its dues from customers on time. Obviously, the sales don't matter. The cash is not received. This rescue measures the number of days it takes a company to convert its sales into cash. Let's take an example of a stock EITC limiter and calculated the receivable days over the years. For 2009 the receivable days is calculated as taking a radio receivable during start that is, some 40 it and handle the year that is 60 80 on multiplying but resist. If I at last dividing this by sales, that is 15,611 does we get receivable days at 16.7, which means I D supplements takes approximately 17 days to Catlett cash from his customers on an average. But over the years we see that this evil days are increasing, but still this company maintains a health issue. Still, I'd easily what do this? Collecting cash within a month, which is indeed a good sign off a healthy company. At last, we look at another important parameter toe check operating efficiency that is fixed as a stone over issue. This issue represent the efficiency with which a company utilizes its efforts to produce the goods for sales. This issue is very important for companies and manufacturing sector, where the companies have large and expensive equipments. Effort er is calculated as sales divided by neck figs efforts at the end of the year, Netflix efforts is nothing but the figs. Assets minus accumulated depreciation. Ah, hire a few TR is always preferred as it indicates good you off. Shareholders for higher turnover also indicates that assets are being used efficiently and large amount of sales are being generated. Using a small amount of asserts, Let us calculate the 30 are off i. D C LTD. For better insights V to eat this formula and jewels average Netflix efforts in start off Netflix efforts at the end of the year. Those effort er for 2009 is calculated as by dividing sales that is, 15,611 by average, off 67 160 years. And someone told him 217. Does we get effort tiaras to want you toe, which means I saluted generated 1 to 2 times more sales than notebook When the office assets, Investors should always compare this number with other peer within the industry, as this number may be good for the companies in the same industry where I deceive along. But this number may be horrible for companies in different industry. With this recumbent on and off the major part of our analysis off the stock, that is financial answers. Now you are more confident in selecting the company based on financial numbers let's move forward towards our goal to select the best company for investment and there were awarding loss in the stock market. 10. Valuation Analysis Intro: I reckon about this. New luxury on valuation analysis. Valuation analysis forms important part off any stock analysis. Valuation analysis is the second filter, which we apply to select the stocks for further analysis. Only stocks which passed the criteria of good financials and attractive valuations must be kept for further analysis. What a book. Richard. It's far better to why a wonderful company at a fair price, then a fair company at a wonderful price. According to move it, the fair company at a wonderful price will produce a tiny one time profit. Jewell profit only from the prices currency, and once it's corrected, you are done. On the other hand, the wonderful business will continue to deliver war and more profits, which will compound jeer Andrea. This is because a wonderful business is able to consistently produce Hi returned on, including with little debt on Is Able to Grow Daddy could be all the time again. A perfect example is Warren Buffett's investment in Coca Cola for a little over $1 billion in the year 1987. That investment to this day has on him difference more than half of what is investor. Dearly, you said Now it'll look before the start, however attractive the proposition is. Sometimes the world's best company may not be the best investment option. One before waited for 60 years to invest in Dairy Queen because many times excessive up to me them. Which is the stock price over the moon or even two stars. If you put you the quality stock at excessively hiding, can you point another wire? The answer is no longer. Her same thing happened during the dot com bubble, when the prices off 18 majors went. All the moves, sometimes of mediocre business at super cheap elevations, can be better investment option than an established business. At extremely high valuations, a $1 stock and be more costlier than $100 store. The price is no relation with valuation office store. Hence we conduct of elevation and else's to judge whether the stalk off the company is running a cheap fare or expensive valuations. Valuation in are not a science and small software or Excel model fails in valuations. You want the best valuation tool available that is, DCF fails and giving the perfect valuations. That's why you don't need to have an M B or have any other major financed egreteau master valuations. Most of one analyst provides this tropical valuation in a very complex way on my use off very complex actual sheets and complicated calculations. This course will provide a complex subject in a very easy and lemon language. Let's start with the common valuation tools, which we will use. The 1st 1 is Christ wanting issue. The 2nd 1 is price to sales. Next, we will see the price to book value ratio. Next is price to one in school ratio. The 5th 1 is intrinsic value, whoever their issue. And at last we will study the new lip moving our strategy. Don't miss the strategy. Actually, you won't find us strategy in any book or anywhere online. 11. Price To Earnings Ratio : The Superstar Ratio: net start with Christ. Warnings issue be issues but half the most popular financial issue and is often regarded as the financial issue superstar. Everyone likes to check the P issue of a storm before investing investors or for juices. Wish you to elevate water stocks. Fair market value is on the often predict the future earnings off this year. The issue is calculated as B is equal to current market price and divided by the earnings per share. That is, it compares the current market price of the stock to its earning puts here. He can also be calculated as market car. Do you wonder why not? Profit Here is your represent a price that investors are willing to pay for every dollar off warnings in the company. If he issues 20 it means nothing Invested is willing to pay $20 for every $1 off ups many stocks are on into high P or forties and fifties. This might trend ridiculous to you, but expectation off market is so high and so strong that most investors for what? The basic fundamentals hence Evan Investor. It is best to more full of the international nature of market and our joining the crowd just because the share price has increased as a minister, I want, including the stars with negative P. This means that the company has negative years on these talks should be completely awarded . Also, investors should know that the company with good growth potential with higher P because investors are willing to put a premium for their future growth potentials. No bombs. An important question. What is the right be? There is no correct answer to this question, because part of cancer depends upon your willingness to pay for our earnings. If you are willing to pay more, it means you believe the company has good long term prospects over and above. Its current condition has the high peas right for that particular stock. As for your decision making process, another investor may not see the same value and think that you're right is all wrong. So the best way to use appear issue is 1st 1 is comparing the office stop within the industry, and with the company operates, being I solution doesn't have any significance. Industry Butte issue is an average of Pete issues off all the stocks in that specific industry or sector suppose we are seeing a company in pharma sector. Then you can compare the P off our stop with the average P or pharma sector to get the better understanding off whether the stock is overvalued or undervalued. Next. You this by comparing the current be with the historical p off that stone. This is the best possible use of Pete issue. Comparing the stocks he'd issue with its historical peed issue is very useful, especially for the stable forms that haven't got any fundamental change in their business. If Pierre issue is Lord on the every spiritual last 10 years, then Stalk is regarded as undervalued or wife or sir does. You can get good entry points if you see the stocks running way below their 10 year or five year everybody. But do what is that phenomenal? Zoff company has not changed. Let's consider an example off water whose current market price have on January 2000 and eight eat waas rupees. Somebody told her 171 and we let us take the valuation, comparing it with the in the strip years, Ahmad off with the leading car manufacturer, often do you. We find average industry p by totaling off these on the wedding with a number of companies dirty someone does. We get average B s 24.9 the stock Very well. Everything that is a matter of has on exposure off rupees who thought? And 438 does intrinsic value comes up We that is prizes caldo the UNWTO E p s which is 24.9 in tow through 1004 130 years which gives rupees 50 year torrents some 131 others intrinsic value since intrinsic will lose less than current market price. Ahmad office overvalue and does visual resist to buy this talk at the current price again, Let's active elevations off tomorrow. By comparing its current be historical p, we find that the average 10 year P o for Ahmad offers 8173 But the current P as on January 2018 years Gandhi it one someone. It has the current peas way higher than the average p. All this talk thus a modifies hide your valued at the current price levels and we should stay away till the prices cool down 12. Price To Sales Ratio : True Measure of Non Earnings Stocks: as we learn, your issue is very useful for stable forms. But in some cases, especially for growing forms, here is your doesn't mean much. The reason could be higher won't spend for further expansions in such cases. Instead of be the price to sales would be used, that is, we try to figure out what the market is willing to pay for a share off cos total sales or revenues, the more the market is willing to pay for companies sales, senator. But I still, since issue is calculated by dividing the current market price of the stock with Salesforce years, we can also calculate price to sales by dividing market cap. My total says. Let's see how it's calculated because fresh two cells is equal to current market price, divided by total sales they wanted by a number of years. Does current market price in the number off years divided by total sales? We can also write coming want good price into a number of years is nothing but market cap has price to sales can also be written as market cap we wanted wayto built is this issue was very extensively used by General Shortness E, according to him. If price to sales lesson 1.5, then strong is under value. And if Christ to Phil's is greater than three, then we would sell the store. Good thing about yes issue is that a like a next sales are less wrong to manipulation and very easy to check. Also, sales are less volatile than earnings. This multiple is very good to calculate the intrinsic value of companies visuals, negative warnings like in case off e here. Also, an investor should compare the company's PS with historical average for better evaluation decisions. A major decided wanted. Oh yes, issues. Dark, Higher feels doesn't mean higher profits, especially with industries having less profit margins like retail stores or electronic partners. These industries have high sales, but profit margins are very less has the best used to the issues to compare companies within a particular industry and should not compare the company's off different industries . Another drawback, O. P s is there. It doesn't get any idea about the profitability off a company. A company might be going it. Seven your sales, but at the cost off, reducing profitability and there were destroying the investors went hence, yes, should always be used along with other issues like be. This issue is best to just company, which are cyclical in nature, like auto industry. That is, companies that I wanted, I learned in patterns. Let us do historical valuation. Off issue Piers alluding paint manufacturing company over India. We have calculated the PS issue by the wedding I'm capped with totals is You can see that in the year 2000 and 17 investors are willing to pay ₹6.75 for every rupee off sales a share made in the 2016. The investors are willing to pay ₹5.86 for each. It'll be off sales. This clearly showed the company's dominance in their history are This may be due to investor speculation when we can quit historical 10 year average Yes issue. It comes out to be at around four Does Investors can look for buying opportunities when PS drops below four off the store 13. Price To Book Value Ratio: mess issue is price to book value issue. This is you compared the current market price off the stock with a book value book Value is also known at the shareholder's equity or network. Benjamin Graham was one of the greatest advocates off this price to book value. Dishy Cristobal quelling simply price for share they wanted by a book. When you can share or price in the number of shares divided by book, really rise in the number of shares is nothing but market cap. He does. We can also right. I'm captivated by book, Will you? Before long this issue, we should know what a book value is. Book early off a form is the is simply the amount of money left under table after company pays off. It's all this obligations. Consider a situation where the company has to close down its business and liquid it all its efforts. What is the minimum value the company receives upon liquidation? The answer lies with a book value of the home book Dwelling is done. Share capital plus the those stock tries to book with less than one are considered undervalue and vice versa for price to book value ratio about one indicates and are the investors are willing to pay more for the company. Dan, it's not. Assets are work. This shows companies good food of profit projections, and the investors are willing to pay a premium for their price to book. Value is very good for financial companies were most assets off cash assets and book value is very good measure for network all the companies, while price to book value has no significance for software forms, which create their profit from mostly intangible assets. Benjamin Graham, the father of value investing, said the investor should always look for companies where the multiple off Piento PV is less than 22.5. Not to stick example and Cultural Christ to book. Will you issue off a stock or Lupin heard. The book value is calculated by adding equity share capital and with those for the year 2017 and we get price to book with us for one someone. This means that this stock is trading at 4.7 times book value as on March 17 hands. This talk is considered overvalue, and investors are willing to pay more for the assets than their work. But the issues that investor that also confident for the good future growth of the company 14. Price To Earnings Growth Ratio : PEG Ratio: next we will see priced one. Exploration, often core PGA issue. This issue was popularized by Pieter Challenge agent issue compares, but I store next issue with the growth rate of four Knicks off the company. This issue measures the value of a stock based on the current earnings and the future potential growth off a company. Bgl issue shows are complete picture as compared to just be issue, since many low P stocks are cheap and PGA ratio compared. The reason why does he's on. Maybe the business has no growth potential. As as an investor, there is no point buying such stocks. If he's less than one, then stalkers considered undervalued and vice versa. So if the stock is 20 on the company's earnings are expected to grow by 15% in the last year, then the stocks PGA issue will be 20 divided by 50 equals to 1.33 And investors should always use Egypt issue at a tumble to check how high the stock is. Trading related oh, companies expected on in school. The judiciary means whether the high price off the stock has justified, based on whether the earnings will grow enough to continue, bribed the stock higher 15. EV to EBITDA Ratio : Why PE Fails and EV To EBITDA comes to play?: that doesn't want to in the press a little everyday issue enterprise really over cos calculated as equity Plus totaled at minus Kashani coolers. Yeah, but neither profit figure that stand for earnings before interest, tax, depreciation and amortization. This is she was needed because of the shortcomings of Pete issue. And, as you know, the components of PR, price and GPS or is equal toe am captivated by pack. The prices are comprehensive enough. The price composes off equity shareholders, but there is a contribution off lenders or banks, so impede issue. We're missing the lenders part of new later. Now let us see the denominator part that is back disdain also figure which we get by directing lots of expenses. Which company has nothing to look like? Taxes and opposition. So why not replace the pricing meaning we attribute a more complete has a figure like enterprise value and, you know, mentor of it have been done that is un in. Before all those expenses, the just trip milk hands me arrived improvise value to about the issue Vino peas, equal toe amcup. They wanted my part. Now, if you replace numerator of it, AmCup plus total that minus cash and cashing urine on denominator with DBT that is profit before tax, less depreciation, less interest. We finally arrive er in propriety value divided by ever now, which is a more comprehensive issue than priced warnings. Issue. Let's take example of a stop Lupin on calculate their issue even to ever done. First, we need to find enterprise willing. For that, we air amcup with borrowings and subtract cash and cash. Hewlett. No. For a Buddha, we can easily go depreciation in trust numbers and add back to activity. This issue is suitable for comparing companies within an industry dividing even to everyday . You finally get the required issue, the presiding preparation off this month. People should be carried out using the historical values on the valuation off the peer group. 16. New Dip MA Strategy Intro: at last, we will see the new tip moving every strategy. We will use 200 a simple moving average as a tool to find our entry points in the stock market. Once you have identified a stock or investing during financial and business analysis, then comes the biggest confusion went to buy the stock stock market every year will give you the buying opportunities. I have developed this strategy. We're mixing technical and fundamental analysis toe. Find the entry points in the stock. It's better the way a safety more using 200 moving average and a complete the share slowly rather than to buy all in one go. Moving evidence is a simple technical analysis toe that's moves off the price data by creating a constantly updated average price. Are 200 day moving averages. Nothing but the average off last 200 closing price of the stock everyday average off last 200 days is calculated and does we get a chart showing 200 moving average detail Strategy is shown as the bonus to this course there. I have shown the detail strategy along with live examples showing this strategy on hardware compared stocks as a long term investor and then converting your returns. 241 200 multi backers don't miss the strategy developed by be with my tweaks and learning off stock markets from the last 10 years. 17. Valuation Model : PE Based: Now we will discuss easiest way to check the valuation off any stock and just take our buy or sell decisions. Our strategy, You, the simple beat issue on historical average. First of all, find out five year historical P. Let us suppose the stopper it between the P or 15 and 25 during the last five years now find the average, which comes out to be 15 plus 24 divided by two, which is equal to 20. Now we have four conditions. The 1st 1 is to check if the stock is undervalued. If the stalker's stating are going to do 40% discount in the arteries, that is 20% off 20 which is equal before. So if the stock is trading between 16 and grow, then stock is considered undervalue on is attractive entry point. 2nd 1 is reasonably value. If he's hovering around average, then the stock is these neighbourly value on its good entry point. If future prospects are right, the tournament is redder. The stock is overvalued. If he's more than 20% of the average, then stock is overvalued and visual awards it stops. The 4th 1 is to watch undervalued If the story is available at greater than 40% discount on average, then investors should do deep study and find reasons for this deep in valuations like you know what example. If you see the stock. If it's available at the lesson turn, then you should breathe the questions and ask for the visa for such low valuations. So friends that this will finish the basics of elevations on in next class, we will learn how to find the entrance equally off any stock, using our simple and very easy strategy. 18. Valuation Analysis- Finding Intrinsic Value ( True worth of a stock): very combo this new session. In this session, we will learn how to find the intrinsic value off any stock friends. You know what any BS is? It is simply the company's profit divided words. Number off common outstanding shares in simple War Ive es is the amount of money that each year hold on. If all the profit is distributed, toe the outstanding shares floating in the market at the end of the year. The growth GPS is an important measure off management's performance because it shows home with the company's making for its shareholders. Let's see the impact off. It appears on the stock price only. Our next growth can drive the stock price and long term because stock prices calculated as GPS into P. Therefore, GPS is an integral part off price mechanism and hands mix huge impact on the price. For example, if X way that is making a profit off $500 million last year and total outstanding shares in the market, we two million then on export share will be 500 divided by two equals toe to $50 per share . Now go find the intrinsic value. We need an important parameter which is called E. P s growth rate, E p. A school trip is an important figure in the valuation off a company E P s growth rate house in determining the future. Part of the company stock would highest EBS Guilty rises faster. All of us go for companies which have experienced economic cycles and has a long history. New companies have volatile history, and it's difficult to monitor the growth rate. Go for mature companies with a consistent history off five years or more. Best is if you, in a life for around 10 years, the chances are predicting GPS growth rate increases with greater financial history. First, I will show you the steps to calculate estimated GPS built rate with a hypothetical company , X, and later we will use a practical example. Let's say the date off company available for 10 years is this, As you can see in 10 years from 2007 to put her on 17 the GPS increase from four point timeto 12.50 and the growth is consistent. Now, our step one is to find the growth rate you growth ratio is calculated by dividing E P s that is latest GPS by the oldest DPS, so growth ratio is 12.5, divided by 4.10 which gives 3.5 and Steptoe. He raised the growth ratio to the power one button one button. Because we took 10 years. If we take five years, it will be won by five. So 3.2 different raised to the power of one button, which gives 1.118 in Step three. We subtract the value that is 1.11 it by one. So we got 0.118 in step, for this is the final step in this stuff. We multiply the value octane in the last hour by 100 to get the average annual growth. It that is 11.8%. No friends. We have find this EBS growth rate from historical data. Now comes a margin of safety principle. It's your choice to did the growth rate same as it is, that is 11.8% or even places and take GPS, bro Traitors 10 41 8%. Finally, we come to calculation or intrinsic value. We have already learned how to calculate the GPS growth rate, and we also know what he is Now we can march these two important parameters to calculate the intrinsic value. The specialty off this matter is that any notice or person without any financial knowledge can implement this matter to find intrinsically off any stock without using complex models , which many analysts use. When no model can predict the exact value, then why you such complex models and make the investment so confusing hands. Like any valuation model, this model to is not perfect, but this model do gives us a fair price to buy the stocks. Another thing is this matter should be used only with fundamentally good stops. We already learned how to identify good stock in previous sessions off this course. Next, start with the steps Step one. In first step. We have to identify the GPS bloated and then, depending upon GPS growth, it we have to find the expected GPS. Steptoe now find the future be future peas. Nothing but the average P off last historical years. Then calculate the future price Future prices completely, R E P s in to be step three now from future price, calculate the present value of the stock. This is called the intrinsic value. Use your marginal 50 at last compared the current market price that the intrinsic value. If intrinsic value is less than the current market price, then investors should wait for the prices to cool down. If intrinsic values greater than current market price, then the stalker's indeed, in the buying range. We can best understand the calculation over intrinsic value with the help of her practical example. Let's see the case study off. You don't want to go the weight of what you don't want a cop is. As for loss as you can see in five years from 2000 thereto 2013 e. P s in Greece from 48.5 to 1 little 6.1. Let us calculate GPS growth rate. So first, find out the growth. More people Growth multiple is calculated, as one does explain one divided by 48.5, which gives 2.19 So now we re of the growth multiple off 2.19 to the power one by five, as we are calculating for five years so 2.19 that is to devour one by fight, which gives 1.170 Then we subtract 1.170 by one, and we get 0.1 some of you in next. Every multiply 0.170 by 100 finally driver on the average and one broke it off 17%. Now comes the important part. You can assume the future rotate at 17% All you can apply marginal safety and lower the growth rate to 15%. Order one person what, even 10%? It's Joeckel completely. We take a conservative call at 12%. Now let's move over to what's calculating, Intrinsic. Really. We already calculated growth rate, and we took 12% as the average and well below trade. So step one is it because growth rate, which was 17% but we used our modern or safety and used 12%. So the estimated GPS after 10 years at 12% growth rate will be 3 to 9.53 Does estimate really before 2000 punditry will be rupees 3 29.53 and Steptoe, you find the average B equals to 16.65 from the data given has expected be for 2023 will be to you to 9.53 and 2 16.65 which gives five for your tricks in step three, 5486 is the expected price for 2023 so the price for 2013 will be calculated as Let's having inflation at 8%. Then price for put out and 13 will be calculated as and you finally arrive for the price 2540 in last up that it's tough for we apply our margin of safety buffer tree commitments. Buying a 2/3 over intrinsic really so to third off 2540 is 1693. So that he commanded range for 2013 is in between plus minus 20% off 1693. If we see the starts, you see that Hugh Motor Co. Operated between 1438 and 2200 does we indeed got buying opportunities below the intrinsic value we calculated at a time of making discourse? He knew motorcar frustrating at 3570 which is indeed a very good rhythm does. If every year you buying a site, be more in your selected stocks near or below the intrinsic value your portfolio, you can increase multi falls. 19. Business and Industry Analysis: welcome to this new lecture. In this lecture, we will learn how to do business and industry analysis, business and industry analysis and walls, analyzing the current situation of the industry and finding the strength off the company that is more. This will enable faster growth of the company, in contrast to its competitors, to understand the business visual on the certain questions. As for fallen checklists, the 1st 1 is, what does the company do? Investors should have a basic understanding off the business, along with what are their products and know the basic demand and supply cycle. If you can't understand a company in 15 minutes, then you should leave and move onto the next talk. The next one is who are the promoters and what are their backgrounds. Investors should know who are the people behind this business. She should award the company's having people off criminal or even political affiliations. Tarred one is what kind of role models is required for manufacturing concerns. Investors should always analyze what raw materials are required to manufacture the products . There can be Sceviour. Impact on the business of raw material is imported from other countries or raw material has some regulations off the government. For example, if the material is important from China, then any change in import policy or taxes will have Seaver impact on the company's profits and growth. Next is who are the competitors. If there are too many competing companies than the company has to deal with low margins and profitability? Can vacation does complete news to in a weight on a regular basis so that the market cap can be written? Just see the example of telecom industry in India. With the arrival of Jew Telecom, every other telecom operator suffered huge losses and in return there to have to come with plants and tariffs similar Tojo Taliqan. But anyhow, the profits were reduced and does have an investor. We should always see who are the competitors. Next one is is the company manufacturing products, which can easily be replicated in other countries. If yes, then the company's days are numbered. Many US forms face this with the evolution off Chinese and Indian economies with cheap labor and raw material, Indian and Chinese company can replicate or manufactured of the products fast and at very less cost. Also in India, the steel industry in the state open job suffered huge losses with the import off Chinese steel does, investors should always see whether this product can be replicated abroad or not. Lastly, the investors should check harmony subsidiaries. Does the company have, if there are too many subsidiaries than it could be, a sign off company routing off money to the subsidiaries? Be cautious while investing in such companies. Finding whether the company has more or distinct business and wanted is the main aim off any fundamental investor. We even study seven ways in which we can identify the mope. The first is the primary sources. This matter is the beautiful entry that is continuously observing products around who starting from their house. Just do this small exercise next morning when you wake up, what do you do first, you smooth your alarm clock, then check the brand off your clock and no, Don, then what do you do? You were asleep us that jack a brand again. I went to brush. Check the toothpaste use. Then you do your shift. Then check the former razor you use. Maybe it's Jill. It go for the shower, check the soap you use on the company which manufactured see the company of her barker or the showers all the taps again. If you go to a supermarket, you can clearly see some products selling like hotcakes, thus showing there is Clearwater competitive advantage. Friends like this. You will get not less than 100 companies by the time you get back to bed at night, and all these products or services you use daily and means there is demand in the market. Sometimes you will find products which are still running at low valuations on doing good girls. My advice is to do this exercise every six months to find out what new products are there in the market and ultimately check out whether there is more to or not. Dan come second resources friends there many good companies, which you might not find around you, but they have clear, wouldn't good in this matters. Year on year sales growth chose the clear moored off any stock. If a company has very laissez scope, that means company doesn't have any move on. Investor should look year on year sales scope for more than 50% in the 3rd 1 is comparison with peers. Just see the falling for companies. Can you guess which company has more? Here's huge er is completed. Us clearly you can see CDR off. Vegard is 24.97 which stands out in comparison to its peers in the industry. This makes us conclude that vigor has clear mood over its peers in the industry. Next comes can weather no sales into profits are completed. Clear MACHOs increasing profits along with increase in sales hands. Investor should compare Syria a profit Good. Syria off seals if there is a lot of difference Dark me. The company's not able to convert increase in sales into profits hands. There is no water business advantage and investors who award such companies. Let's take example of regard industry again. As we can see both sales and profit increased over the years on CDR of sales and see it here apart. Both increased. These are good signs off a business and one day your mobile. No bombs conversion off profits into cash. As we learned earlier, the sea is done, but payment not received are actually entered into the accounting books and hands reflects into profits. But payment who actually received is shown in C earful has. There is difference between patents here. Four. If payment is not received that particular year, but over the long term, cumulative park should be similar to cumulative CEO. They showed that companies actually receiving payments on profits are indeed converted into cash. Does an investor shoot a word companies were cumulative here for is very less than cumulative back next year. An example off Asian pins. You see that issue? Pence has profit off 10,800 his ankles while it collected 10,958 euros as cash flow from operations, which is very healthy. Sign off a company as what cumulative, fearful and cumulative part are almost similar, which means issuing bench is actually receiving payments and profits are indeed converted into cash. Thus humility part and cumulative here for, can't you? Inner vagueness is and helped off any stock. Next comes value creation, for she lowers a company which has significant warp will create great value for its shareholders at all. Would great difference. Ah company basically can do two things with profits. Either it can distribute profits toe ordered shareholders in form of dividends or retain some within itself as a result and surplus for own gold does. An investor should look for company, which is increasing its dividend year on year along with in Keys and retain. Onyx Retained earnings is nothing but net profit. Miners do them next example of Procter and Gamble. This either total return earnings over the years is some 128 girls. Also increasing Market campus 23,916 minus 2335 which gives 21,581. Let's see another important parameter, which is value created by the company. Value greater by the company, is calculated as increasing market cap divided by total return. Earnings in 200 has we see Procter and Gamble created a welt off rupees 29.64 for everyone . Drippy off profits do tend has Procter and Gamble in actually creating approval for its Cirillo's. Lastly, become poor. You don't only booty. Many consider return on equity as a single most important perimeter toe check. If the company's actually creating wealth for shareholders or not, Hi inconsistently down on a Cody shows strong management Down on equity is calculated as that prophet divided by shareholders Equity. The minimum return on equity and invest Social Target is 20% since Donald Equity has it. Could he has its component hands. Companies with high debt, which reduces equity, also end up showing high down on equity. Does return on equity should not be followed blindly. DuPont analysis is once us, to which decompose visited down on equity and shows whether dark is manipulating high return on equity or no, as we know you're down on the good is not profit. Divided by shareholders equity, which can be did on us. Not proffered. Divided by sales into sales divided by assets and do assets divided by shareholders. Equity now sees Cancels with seals Efforts. Cancels out with casters, so we are left with net profit divided by shareholders. Equity. These three part shows profitability in tow assets turnover into leverage. Net profit divided. Marcel shows the profitability. That is how much margin the company's in rating sales upon a search shows how much assets are used by the company. Assessable on Cheryl of the Goodie represents the financial leverage. This means that management off a company can increase its assets by using hard X this world in higher done on duty if the company has hired at this part, will have higher value. Handsome return on equity is high. This can be do toe three reasons that is, either. It can't be because of high profitability that this companies able to put a high price for its products. Second, it can be because the company is utilizing its assets efficiently or the company's turning its efforts again. Anything on third can be leverage. If you're done on equities low by using do want analysis, you can also check where the company's lagging. And that is which part the company Nude Stone Bull Let us understand from the example of Asian pins. The shows for the year 2000 sounding the profitability is 1.6 it, which means the companies earning WellPoint's except ₹400. Assets turnover is 1.3, which shows harbored the company utilising its assets, and the leverage is 1.64 means the company has 1.64 times as that spot rupee off equity. This is the benefit off using do point analysis. The shows which factors are more involved in creating wealth for the investors does whenever you are comparing a company with its beer always compared them on profitability As such, turnover and leverage does. If you find a company which shows saves roto 15 to 20% over the last 10 years and passed almost all other tests discussed in this lesson, then he should be confident that you have found a company with sustainable business and Wantage. 20. Initial Screening/Checklist of Stocks: very humble this new session, friends, stock market have told, and so stocks and often investor is confused, which talk to buy and which to leave. Sometimes we don't even know the name of the company, which can be work investing. And you can see there are more than 4000 stocks to slept from on, which is indeed a huge task for investors, especially investors with full time jobs or businesses, it is almost impossible to analyze each stop one by one. No, we are at a stage where we can make our initial stock screening funnel by which we can eliminate, told us of useless stocks and focus our attention on few stocks. For for the research like valuation and management analysis, the 1st 1 is, If you don't antiquity greater than 20% you can also use 15% to get more stocks for analysis. Second is that we could eat less than one stop should be almost debt free. The Taliban is from over pledging lesson 10%. 40 Sales to revenue CED are greater than 15% for the last five years. Next is CFO must repose toe Next, we have operating profit margin must be greater than 15%. You can also use 12% to get more stocks for analysis. Also, net profit margin, that is NPM also should be greater than 15% here. Also, you can Jane discredited toe one person. If you want more stocks for analysis with this seven initial screener, you can easily eliminate thousands of stops. You have not worked, and now you can focus your attention towards analyzing more aspects off the stocks. So let's apply our checkers toe any stop screener available in your country here, I'm using Screening Order, which is a free stock screening website. So when we hit the front query button, let's see Khomeini stocks are filtered as you can see out of 4000 plus stocks. We're left with just sound two years stock for analysis. Now you need to focus on these sounded stops only, and an attitude of 78 stocks is very much physical for small investors. Important point to note is that you can tweet the feeders mention about and on your own filters like dividend payout ratio or current ratio and any other fitter. As for your needs, 21. Management Analysis: Vericom. Bogus New session friends. It would be extremely dangerous if you relies solely on numbers and valuation alone while purchasing a particular stock, sometimes dismally to value. Perhaps so now we have come to the confirmation stage, that is, management analysis. This state will confirm our decision off choosing a stock after financial, business and valuation analysis. Warren Buffett in his 1989 letter to shareholders. Stroke stick to prune management with lots off integrity, talent and passion. After some of the mistakes, I learned to go with the business only with people whom I like, trust and admire. It is said that a good management can turn around the poor business while a poor management can review quality business. The success and failure often organization, depends upon how effective the management is. The management team off a company responsible for propelling the future growth in the right direction and ineffective management at the top offered results in failure off a company. Does investor current overlooked this human aspect? Off company analysis, which is called management Analysis Management analysis, is definitely an art, as you can't have a new medical value for companies. Management management analysis is most important yet most ignored part by the investors. This is one part off analysis where most investors runaway Reza. The reason is simple. Small investors can't interact with the management even if they interact, whether it's an orginal meeting or quarterly reviews. Management always presence of rosy picture to investors. Even if the competition in decreasing sales quarter on quarter or year on year or sliding profits, management will always present all is, well, pictures. So how to check whether the companies run by honest people, which an investor can trust? Let's see one by one, 1st 1 is promoters background check. This is first up towards checking whether the management has any black history. Don't go for education, qualifications or network off the promoters. These have nothing to do with the integrity of promoter. So you will ask How do check this? You are not related nor know them personally. The answer is simple. Just google it. You will find all the truth and room was related to the promoters. Let's take example off from water off technologies, talk cranky and serve the background of promoting Mr Donation in Wana. So if you certain Google for donation one a profile, You can easily get many links from which you can see the credentials of promoter and take your decision in a better way. Second, is celery being taken where promoters and potential successors. This is one sec perimeter, which tells about how serious the promoter this towards his business investor, confined celery and real immigration data in the annual report of the company. Mostly promoter stick salary in the range of 2 to 3% of part is industry standard and should be acceptable. Anything very of all this should be seen with suspicion. Also, check the increase in salary of promoters if the company is facing tough times and profits are not increasing while companies also nor point diffidence. But promoter is raising his Selves year on year, then this should be seen negatively. Also, if companies under huge debt and promoters are receiving frack paychecks, this also should be seen negatively and promoters should be considered non serious towards future of the company. You can easily get celery and enumeration from annual statement. Let's take a look at the salvia promoter of a stock or regard, and you can see annual statement shows salary but enumeration and allowances on where each and every print water in their deals. Simply looking, stand alone on this Will North sold the purpose? Investors should always look year on year increments. Most often, investors don't show the inclement and salary from last year in the annual statement offer . Particulars here. Hence, investors should always look at in cumin percentage to have a better look at this important aspect off management analysis. Next is Dugan. Think better higher during payer precio who but increasing dividend rated shows management is investor friendly, but investors should also investigate how the company's paying dividends. It is crucial that companies paying this David in front of free cash available and not from the that, as we know, free cash flow is calculated as CFO, minus capital expert nature. Investors are always a wide companies which are paying dude and from Dex. As such companies shortly and often crumble under weight off in cluster. In future. Then comes an important parameter that is promoters shareholding partner. As a rule of thumb, higher promoter state is perceived as postive, and lower state could mean low confidence of promoter in their own company. As nobody knows a company battered and its promoters. I really a promoter should hold more than 50% stake in the company if less than 50% on increasing share holding pattern shows from waters. Faith in the Business, a low promoter shareholding means low confidence of promoters in the future of the company . In almost all companies which went bankrupt or were some kind of frauds happen, one thing would be common. They all have low promote. Oh, stick, that is, If company fails, then it is the money of the investors which has lost, nor the promoters. A very high from water holding is also not a good sign. Our diversified holding on a good presence off institutional investors indicate that promoters have little room to make and carry out random decisions while looking at shareholding pattern figures. A single quarter or here is not likely to tell you much. You should compare the shareholding patterns with those of the previous quarters to check how holdings have changed. Let us again take example of Vegard Industries and look at the share holding pattern from annual statement off the company. When we look at total, we see that the shareholding is around 65% which is a good sign that promoters our faith in the company and are confident off good future of the company. Next come shares buyback. Sometimes during initial stages off the company, the promoters deluded stick in order to fund a business expansion. After some years, they tried to make up for lost IQ and issue shares. Why back which is again a sign of good management and their belief in the business. Share buyback increases up from water shareholding in the company shares buyback is again, and during the market, remorse and management tries to on the lost confidence off shareholders. So investors should always be aware off this management recall. So share my pack is also done. Run. The company's going to low valuations and promoter who have faith in the business often grab this opportunity to increase their shareholdings and ultimately, greater control of the company. That's why promoters really go for buyback during bull market Does Investor should always ask the question why the company is doing shares buyback. If there is less sales growth, profits are also receding and all of a sudden the company comes out with the shares buyback . Then management may have misused the buyback strategy to create an illusion for investors that they are creating value by reducing number of shares. Consequently, it is likely to cause a shares price to rise and create an opportunity for them to send their stay at a profit so investors should watch or, for this share buyback trap. Also no homes pleasure, percentage like view. Take loans. The promoters also raise funds by keeping their shares as collateral. Since shares are considered asserts, this can replace to take loans and restaurants. And if the promoter is not able to re pillows, then Lander has the right to send these years and are just there alone. Pledging off here is does very dangerous for small detail investors as this causes crashing stock price increasing. Pledging off shareholding by promoter is seen negatively as disintegrates, deteriorating financial position or promoters ingredient leading along with decreasing promoters. Shareholding is the worst thing that can happen in any company. This shows from waters are not able to repay their debts have raised against this year's. This means that lenders have sold the shares of the company to settle their views, decreasing promoter pledging along with constant and increasing promoter shareholding is seen as a positive sign for the home pledging lesson 10 person can be ignored on close what should be kept on this year on year, alleging percentage should be analyzed very carefully each year on year. Last but not least, there should be no government influence. Order should be minimum influence. The government should have no interference in the management issues as well as in the profitability of the company. Also, notice that raw materials needed for products off the company should not have greater control of the government. So friends that this we finish our analysis of management, which forms an important part off any stock analysis. 22. When to Sell a Stock?: welcome to an important topic, which is a rental. Sell a star since no one can time the market knowing went to sell a stock is equally tough decision as buying a stock, especially since grilled usually takes over and you are always seeking a higher price. Ask for Felix Fisher if the job has been corrected and when a stalker's purchase. The time to sell is almost never. But this really happens because not all companies stay attractive forever. Does, as we saw knowing who went to sell a stock is equally important as knowing van and what to buy. So taking seven decisions based on profit criteria can never make an investor reality. Have investors should stay away from approaches like these that is selling when the stock doubles or selling whenever a stock turns into a profit? Or you expect the correction and plan to buy it again at Lower Price or the stalker that 52 week high and I should sell no or stalkers don't get lifetime like so I should sell now on under similar approaches like these does a cell dizzy and has never taken build on price off the stock. Now our president you some checklist for knowing when to sell the stock. The first is the deal reading operating performance off the company. If an investor finds declining sales year on year or declining profitable two year on year or increasing that level year on year or reduction in promoter shareholdings on increasing in promoters pledging, then it is the best time to sell the stock that ready woman. Next is the changes in business dynamics, and investors should always keep himself updated with the latest development around the world and in technology. If you come across certain developments, which will affect the stock serially, then you should immediately exit the stock. For example, no one by Siri rooms now hands the companies dealing. Only its Syrian arms vanished. The woman's USB drives came to the market. The third is if your portfolio contains too many stocks, little instead. Warning stocks is like having Children don't get in war with more than you can handle. This court closes one more topic, that is, how many stocks should I own? Many investors have this habit of buying too many stops every now and then and then it becomes cumbersome for them to monitor each and every stock in their portfolio. If Bastard is, then you should immediately exit some stocks and made your portfolio later. Then comes the wrong fact. There are times that after purchasing stock, you come to notice certain facts like bad businesses are bad management that do not match with the reasons you purchase the stop. So it's best to sell the stock that very moment as more money is lost. Holding a bad business, hoping to get back your lost capital. If you have made a mistake, accepted and swallow illegal and move on next is better opportunities available? We all do investment to maximize over gains. So if you can figure out another good business being run by a great management backed by good numbers on available at bargain, then it's a leader timeto more and sell the stock to buy this new, attractive stock. Another reason for sellers evaluations going very high and investors should exit from a stock when you see valuations going expensive. Ah, stock would be 10 can be expensive, but star could be 40. Maybe so. How do that if the valuations are high and easy? Way to check is whenever the market cap off, any stock becomes higher than the entire industry, and investors should exhibit the stock immediately. Lastly, the changes in management as had ah, good management, can turn an ordinary company to a great company, and a bad management can turn a great business into an ordinary one hands. Whenever there are changes in management and investor should be very cautious, investors should see the credibility off new management and take decision to quit if management have any deductions. Has anyone Lester? We should believe in what Warren Buffett says. Carla Surprise. We have no interest at all in selling any good business debt Berkshire owns. Does an investor should hold tight any good stock, which he owns for years and back? It's still it's fundamental stating.