Investing Basics - Feel free to ask the most basic questions


(Mahendra243) #799

FII/FPI 28-Jan-2019 6678.52 6455.08 +223.44
DII 28-Jan-2019 3717.26 3624.94 +92.32

If both the FLL and DLL bought today…how come the nifty sensex and midcaps corrected that much today…I dont think retailers can bring market down…any clues?


(rupaniamit) #800

@jamit05 - I am not a big fan of financial jargons myself. Will try my best to keep things very simple.

I will assume that company business economics demands investment in Working Capital to generate incremental growth. As you rightly said, if debtor days are increasing, it will put pressure on the company’s WC. Either company has to fund WC from internal accruals or outside debt. Let’s assume that company takes additional debt for investment in WC and then see impact on each item that you have mentioned independently:

Inventory Turnover: Company should be able to have right inventory levels (because of debt) to support growth in sales. So no big impact at a high level.

Operating Profits: No impact to EBIT or EBITDA. Increase in interest cost should reduce net profit margin.

FCF: Lower net profit means lower FCF as some cash was given away for principal and interest payment.

ROE: Lower NP but higher leverage should balance ROE and there should be minimal impact depending on the weightage of NP to leverage.

As I mentioned above - one needs to check what impacts ROE more. Decrease in net margin or increase in leverage and to what magnitude.

Hope this helps.

Thanks,
Amit


(sarthak kumar) #801

Hello,

Can someone please point me to a resource where upcoming de-mergers can be tracked.

Thanks


(raghav sharma) #802

(rishabhkaul123) #803

Since there is a lot of uncertainty in the market (and its still very expensive), I am thinking of parking my excess cash (viz about 10% of my total networth) in a liquid fund. Right now it’s in my savings account.

I am thinking of putting it in a liquid fund for the next 2 months and will look to invest as we near closer to elections or maybe even post the elections.

  1. Is this a good strategy?
  2. Where are you folks parking your excess capital as you wait and watch (And if it’s in liquid funds, what are some of the better ones?)

(Harsh04) #804

i have a home loan OD account with SBI and i always park my excess funds there.
So, effectively, interest is only charged on the remaining balance of the homeloan.
Money saved = Money earned :wink:
i feel so far this is the best method to use my liquidity and save EMI outgo.

You can also look at liquid ETF, although i am not sure of its returns lately.


(Sujay Ghosh) #805

For 2 months, why not let it remain in the savings fund instead? In that way you can quickly transfer it to your Trading account.

Anyway, for that short period, I feel overnight funds are best suited. You can choose HDFC, ICICI, Kotak or SBI’s (with high AUMs).


#806

If it is just for 2 months, how much more would you gain in 2 months with liquid funds than with a savings account? If the difference to you substantial, then you can go with it. Also, credit risk always exists even for liquid funds, the NAV will fall, although it will regain fast compared to other debt funds, liquid fund of Taurus fell and investors lost money. Then there is redemption, there a few funds which offer instant redemption, but I think it is up to a certain amount and there could be redemption pressure if many redeem at a time. Then there is STCG.

If you want to invest, then check for the highest AUM funds, so that they don’t invest much in 1 bond, and also the redemption will be fast, check if you can redeem as much as you want instantly. Invest in AAA rated bond funds.


(skg) #807

Hi, can anyone point me how to calculate intrinsic value of a company with an example? I tried to find it online. But it seems complicated. So any help or pointer will be appreciated. If it has already been discussed in any other thread, please point me to that.


(Dinesh Sairam) #808

These are a few Valuation related threads in VP:

If you’d like a complete learning solution, I suggest you take a look at the following:

http://people.stern.nyu.edu/adamodar/New_Home_Page/webcasteqspr19.htm?utm_source=quora&utm_medium=referral

(Prof. Aswath Damodaran’s Spring 2019 Valuation classes at NYU Stern, put up online for everyone to see and use–for FREE)


(skg) #809

Thanks Dinesh. I will go through prof Aswath video first to understand the concept as I am not from finance background. So I might not be able to use excel directly without knowing the concept.