Advantages & Disadvantages of Debt for Companies

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Why do the big companies have debt? Are there disadvantages to being a debt-free company? Debt is Good or Bad for Companies? We often see companies carry debt on their balance sheet. For example, here is data for companies in the BSE-500 index. Out of all stocks in this index, only 19% are debt-free. About […]

Shareholder Equity – Meaning, Basics, Examples, & Interpretation

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A more common term for shareholder equity is Net Worth. It is visible on the company’s Balance Sheet. This number highlights an approximate liquidation value, net of liabilities, of a company. It is the capital receivable at the hands of the shareholders after the company’s assets are sold and all debts are repaid. In terms […]

Realizations About Shares Portfolio: How To Build A Winner

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Stock market investing is not only about buying and selling stocks. After a stage, the investors begin to see the investments as a collection of stocks. Single stocks transform themselves into a shares portfolio. A stage comes when the investor starts to pay less attention to individual stocks. For him/her, more important is the present […]

Best Sectors To Invest In The Indian Stock Market [2022]

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In this article, we’ll see an approach to identify the best sectors to invest in the Indian stock market. The good sectors are the ones that are intrinsically profitable. So, this analysis is totally based on the concept of profitability. The best sectors will be the ones that are most profitable. In this article, we’ll […]

Working Capital Use: How To Calculate & Interpret It [Formula]

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The formula of working capital (WC) has two components, current assets, and current liabilities. Both are the numbers of the past. Though it is derived from the past numbers, the working capital use is in the future. This is the reason why it is a vital number in both corporate finance and valuation.  Companies report […]

What Does Negative Shareholders Equity Mean On Balance Sheet

Recently I was reviewing a list of stocks from the BSE-500 index. I found some stocks showing negative shareholders’ equity. I wondered, what caused the negativity? The companies I’m talking about are these: None of the above companies are financially healthy. To cross verify, I checked their overall scores in my stock analysis worksheet. These […]

Value Trap: How to Identify & Avoid it in Stock Investing?

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People who are hunting for bargains in the stock market may fall prey to the value trap. A stock whose price is falling or is trading at a low PE ratio may prove to be a trap instead of an investment.   Fans of Warren Buffett would love to emulate his investment style. But his style […]