Which mobile phone do you buy if you have Rs.

10,000 cash in your pocket and one of your friend ensure you to pay Rs. 10,000 for next four months? (You can buy phone on credit basis too)

If you still have extra money after your purchase, mobile vendor offer you a second mobile phone at 90% discount. Would you buy second mobile phone?

FINANCIAL PLANNING
MONEY IS PLENTIFUL FOR THOSE WHO UNDERSTAND THE SIMPLE RULES OF ITS ACQUISITION

1. Start your purse to fattening (1/10th of income) 2. Control your expenditures (7/10th of income) 3. Make your gold multiply (Investment from savings) 4. Guard your treasures from loss 5. Make of your dwelling a profitable investment 6. Insure a future income 7. Increase your ability to earn

CASHFLOW
(LONG TERM INVESTMENT)
1) 2) 3) 4) EQUITY (DIVIDEND) REAL ESTATE (RENT) FIXED DEPOSIT (INTEREST) MUTUAL FUND (DIVIDEND)

SAVINGS

CAPITAL GAIN
(SHORT TERM INVESTMENTS) 1. MARGIN TRADING FUTURES 1) COMMODITY 2) CURRENCY CALL AND PUT (OPTIONS)
2. EFFECTED OR PREDICTED BY TECHNICAL ANALYSIS MARKET EFFECTS POLICIES WORLD MARKET SCHEMES

Investment

TRADING IN STOCK EXCHANGE  STUDY FINANCIAL STATEMENTS (FUNDAMENTAL ANALYSIS)

FINANCIAL STATEMENTS SHOW YOU A MIRROR IMAGE OF CORPORATION TO LARGE EXTENT IN TERMS OF MANAGEMENT, FINANCIAL STABILITY, PRODUCTION, MARKETING, CORPORATE ATTORNEY ETC.

ANPS CORPORATION

INCOME STATEMENT
Revenues – Cost of goods sold Gross Profit 100 -20 80

– Selling expenses
– Administration expenses – R&D Operating profit or EBIT

-16
-16 -20 28

– Interest expenses
Earnings before taxes – Taxes (30%) NET PROFIT / LOSS Gains (losses) from discontinued operations extraordinary Gains (losses) Net income after extraordinary items Basic net income per share Dividends declared per common share (30%)

-4
24 -7.2 16.8 -2.2 1.6 16.2 0.162 0.0486

BALANCE SHEET
ASSETS Current assets Cash and cash equivalents Accounts receivable Inventories Other current assets Total current assets [A] Non-Current Assets Investments Plant, property and equipment (fixed assets) Intangible assets Total non-current assets [B] TOTAL ASSETS [A+B] Market Price 150 235 75 460 498.5 15 12.5 2.5 20 3.5 38.5 Liabilities and Shareholders’ Equity Current Liabilities Accounts payable Short-term borrowing Other current liabilities Total current liabilities [A] Long-term debt Other long-term liabilities Total non-current liabilities [B] Shareholders’ equity Share Capital of Rs. 1 each Reserved & Surplus Total Equity [C] TOTAL LIABILITIES + EQUITY [A+B+C] 100 350 450 498.5 2 1 1.5 4.5 30 14 44

CASH FLOW STATEMENT
CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES
-11 7.5 -3 1.5 1

CASH FLOW FROM FINANCING ACTIVITIES
Increase (Decrease) in short term borrowings -3

Income from continuing operations 16.8 Purchase of fixed assets Adjustments from continuing Proceeds from sale of fixed operations assets Depreciation 9 Investment in subsidiaries other operating activities 3 Interest Received Changes in certain assets and liabilities Dividend Received Decrease (Increase) in accounts receivables -8 Other investing activities Decrease (Increase) in Net cash provided by investing inventories 5 activities (B) Increase (Decrease) in accounts payable 8 Increase (Decrease) in accrued liabilities -6 Net cash provided by operating activities (A) 27.8

-6
-10

Payment of long term debt -8 Dividends Paid (30 %) -4.86 Purchase of company stock 0 Payment of capital lease obligations -3.5 Proceeds from issuance of long term debt 3.5 Net cash provided by financing activities [C] -15.86

NET INCREASE (DECREASE IN CASH) [A+B+C] CASH AT BEGINNING OF YEAR CASH AT END OF YEAR

1.94 10 11.94

HOW TO ANALYSE A COMPANY
1. Gross Profit Margin (GPM) = Gross Profit / Revenue 2. Net Profit w.r.t Gross Profit 3. Management Performance
i. Return on Equity = Net Profit / Total Equity (Profitability) ii. Return on Capital = Net Profit / Total Capital Total Capital = Equity + Liabilities (How Management utilizes funds) iii. Return on assets = Net Profit / Total Assets (Efficiency of the company) iv. Net Profit Margin = Net Profit / Net Sales

HOW TO ANALYSE A COMPANY
4. Debt / Leverage Financial Ratios
I. Debt Ratio = Total Liabilities / Total Assets (Degree of financial leverage as proportion of assets financed by liabilities) II. Debt to Equity Ratio = Total Debt / Equity III. Financial Leverage Multiplier FLM = Total Assets / Total Equity (Measure degree to which company is financed through debt) IV. Interest Coverage Ratio ICR = (Pretax Income+Interest Expense)[EBIT] / Interest Expense (How many times interest expense be increased & still covered by pretax income)

HOW TO ANALYSE A COMPANY
5. Liquidity Financial Ratios
a) Current Ratio = Current Assets / Current Liabilities (Measure of short term liability) b) Quick Ratio = (Cash + Receivables) / Current Liabilities c) Total Asset Turnover = Revenue / Assets ( Measure of efficiency of company use of assets)

6. E/P Ratio = EPS / MARKET PRICE 7. B/P Ratio = BOOK PRICE / MARKET PRICE

THANK YOU!

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