Investing Basics - Feel free to ask the most basic questions

([email protected]) #273

Hi All, Can someone let me know what does the Number of Locked shares mean, is that similar to Pledging.

Also what does the ‘Outstanding convertible securities’ mean (is that FCCB?)
Inputs would be helpful.

(bullishinvestor) #274

Thanks for putting out this thread/post. Stock/investing is an ocean. What everybody/ experienced guys talk about is somewhere in the middle of ocean where start and end are unidentifiable. Please give us a start point where a layman can understand and put a small roadmap where the layman can confidently say that 'I’m investing"

(Dhinakaran) #275

What is the right way to calculate capex?
Capex = Purchase of PPE in cash flow statement or
Capex = Change in tangible assets in balance sheet + Change in Depreciation

Since the numbers doesn’t match, Please advice which is the right way.

(vedantc) #276


Capex is nothing but capital expenditure incurred for creating assets; different from expenditure in the course of a company’s operations (opex).

Here you are trying to reconcile if the expended capital matches with an increase in tangible assets and reduction due to depreciation. However, companies calculate depreciation on different items differently and capital expenditure need not create tangible assets. Goodwill is an example. :grinning:

This post is great for understanding capex.

(Dhinakaran) #277

@vedantc Thank you for taking time. I appreciate your effort.

I am still not clear with this. I think I need to rephrase my question.

  1. Capex = Purchase of PPE in cash flow statement. Is this Correct ?
  2. I understand there could be mismatch due to Depreciation. But I see a huge difference. I am looking at Gaware wallropes. In this case,

Purchase of PPE in Cash flow statement = 1901.08
Change in tabngible assets = 537.49
Change in Depreciation = 102.71

Why there is a huge difference in Purchase of PPE and Change in tangible assets + depreciation ? What ever the company has bought should have been converted into real assets. Correct? or am I missing something here?

Thank you again for helping me out.

(ad9) #278

After close of Mkt, in NSE in some shares there is a Buy Qty and Buy Price and in some there is Sell Qty and Sell Price data and for some shares there is no data, eg tata motor is showing Sell price 400.3/- and 12702 qty today at 5.40 pm.
What do these after mkt close figures represent?
Many Thanks!

(ad9) #279

@Donald sir pls advise on above

(kushal) #280

For holding companies like VLS Finance, whats does ‘sales’ and ‘expenses’ figure stands for?

(The Confused Consultant) #281

Special situations valuation depends on developing perception. If management has intention to monetise land with an intent to share with shareholders you can include in valuation. In this sense all PSU are valued 1% of their land or less. Because they wont sell in first place, even if they do you never know what is the purpose of monetise.

Stock holder may not get anything, good number of times a special purpose vehicle is created to offload land at cost. profit is booked in the name of private company. If there is a cash component and recorded of course shareholders benefit. But again if recording of cash amounts to illegal and void transaction per se no company will record.

(The Confused Consultant) #282

Paying dividend is a decision of capital allocation. A part of capital allocation also meant towards building good perception towards investor. A token dividend 10-20% keep the flock together.

Yes, the institution are big holders of financial firms. They have their own cash flow requirement, keep pressurizing for everything including salary cuts!:grinning:

(The Confused Consultant) #283

Stock exchange (BSE) have authority to decide T2T and when to release. This is a dynamic mechanism, of course they inform in advance for changes.

The criteria for different categories and list can be obtained from BSE site.

(The Confused Consultant) #284

Pledging means you have taken loan by giving commitment for a promise against your own shares from a financial firm. if you dont pay the loan the financial firm may sell off those shares. Imagine when millions of shares are sold, the price will nose dive.

Promoter holding is subjective criteria for decision making. More important is do promoters have capability but not holding majority of shares? The capability can be build over the years or they have from begininng.

(The Confused Consultant) #285


Never try to build a cash flow from balance sheet main schedule. Check the breakup of individual item in groupings and let me know.

(The Confused Consultant) #286

Cash conversion cycle-CCC

Days inventory outstanding PLUS Days sales outstanding MINUS days purchase outstanding
Summation of payables, receivables and inventory. How effectively management is using one account against other. Example if I collect late then I can pay late and improve my liquidity. Or if I have sales return I send them back to vendor if I can.

Few points:

If a company does not deal with inventory it becomes a comparison of purchase and sales. But issue happens say like IT companies where purchase is not significant cost rather its human cost.
CCC period against gross margin should be healthy. More sensitive if you have cash credit or loan against working capital.
Improved CCC on vendor strength could be temporary, consistency is important to demonstrate.
Note- you can read details further on internet. Not trying to repeat academic stuffs a lot here other than bare necessity.

I suggest read whole post and let me know questions if any.

(The Confused Consultant) #287

Locked in period is a pre determined period agreed by promoters (considerable ownership) is prevented for selling their shares. Check company AR to know lock in period.

Outstanding convertible securities: a convertible security is the financial instrument which can be converetd to equity shares like convertible debentures. Outstanding means the ones not converted to equity shares yet.

(The Confused Consultant) #288

Start point is you, build capabilities day after day. I have dedicated a thread for this.

It’s a hard day’s life. Sorry.

(The Confused Consultant) #289

What you see post market hours is interrupted (closed) feed from stock exchange via broker. It has no meaning for you, can not be traded.

(The Confused Consultant) #290

Please check annual report for last year and profit and loss account. Let us know what income and expenses head you see and where is doubt?

(The Confused Consultant) #291

Capex you see in fixed asset schedule is taken from fixed asset register. Here cost is charged to register irrespective of cash is paid or not. For example you bought an asset where cash is yet to be paid. Depreciation is charged on accrual basis of accounting.

The capex amount in cash flow is the actual amount paid or spend.

The difference is natural between cash accounting and accrual accounting.

([email protected]) #292

Thank you sir for getting back, will check the data and get back.