Positive inventory means that there is a decrease in inventory amount. The amount is reported as positive because reducing inventory usually has a positive impact on the cash balance of a company. When we think about how to evaluate and monitor inventory in a business, we should look at it from two perspectives:
Impact on cash: The first perspective is how much cash is tied up in inventory and how long is that cash being tied up. As a general rule, the lower the inventory balance and the less time we hold that inventory before selling it the better. The focus here is on the time from purchase from the vendor to sale to the customer.
Impact on profitability: The second perspective relates to the impact inventory has on overall profitability as well as the many pitfalls associated with how inventory is accounted for.
yes you seem to be correct however inventory turnover ratio would be an accurate indicator as to analyze the positive/negative effects to working capital as a significant increase may be in normal course if a huge order is received by a company or if it is expected to make a huge quantum of sales in the near future
Hi. In the Investor Presentation of Shaily Engineering Plastics (slide 15), I saw the following ratio. Can someone explain as a concept what is this ratio supposed to indicate? Especially for a manufacturing company which has been spending a lot of money to put up new capex.
Hello, How do I know what is the market capture of a particular sector. For example I want to check what is the Footwear market in India. or what is the jewelry market in india? As you can see from the below link it says the slippery market share in india is just 5%. how do I find that information for other sector? Has someone done more research on this will be helpful for my research. thanks
CMP 500
If a company has q2 revenue of 100 cr and net profit or bottom line of 10cr with current pe of 40 then assuming next quarter 15 percentage growth in revenue with same net profit margin .
How can I calculate the PE please help
Use the profit margin and revenue to calculate net profit.
If the company is not doing share buybacks or diluting its equity use the same outstanding shares for future. (Outstanding shares should be available in P&L statement else you can calculate it).
Through this calculate EPS (Earnings/outstanding shares).
Now you can calculate forward P/E, current share price i.e., 500 divided by EPS.
When one adds a tracking position, after how long does one build a position? Is it done according to some technical patterns being triggered, some x% run up?
Kindly clear my doubt. Thanks
The below company popped up on my screener today.I havenāt seen a balance sheet with zero equity before. If any can explain how this is possible? Company name: Sobhagya Mercantile Ltd
There is no single way. You need to figure out whether you are convinced about the potential of the company and the hopeful positive impact on its share price. And that is when you decide to increase the amount of investment that you put into the company.
A tracking position means tracking the company. So if one is confident that he has tracked the business to the point of buying more, he can start building a position.
It can happen that, we might have got excited knowing about a business and bought some shares out of excitement, and after a few days the excitement may disappear, and we by ourselves may feel that we have made a mistake. So, it does not do harm to wait for a couple of weeks.
If there is no such thing, we can wait for the immediate 1 or 2 quartersā results to come, and go forward, we can also check what others in the stock are doing, how price w.r.t results is behaving, and price w.r.t business is behaving, and then act. Of course, we can buy irrespective of what others are doing, but this means that, we have done some work, and we have an independent view, even an opposing view to others, seeing value when others are not, so we are buying even if others are selling.
Also, if it is considered a long-term holding, building a position need not be quick, we can go slow, we can buy more with time, even buy at a higher price, and participate in a long journey.
Some thoughts, and it can be done in many other ways too.
Another questions Iāve regarding churning and portfolio rebalancing. Iām in a very early stage of investing started out with investing just 1k in a stock.
In a few months to make sure that Iām investing say x% of my portfolio, i invest more money than before (Say 10k on a stock, since portfolio is growing), older stocks tend to diminish in weightage and the no of stocks start to increase.
I tend to avoid upward/downward averaging in such stocks with the thought that maybe the stock has gone into consolidation or some other reason like already given a good run up etc.
So with 50k portfolio with 10 stocks of equal weightage. Now one starts investing 10k in new stocks. Then say 25k in each stock. By the time the portfolio is 2 lakhs, the older ones contribution would have reduced from 10% each to 2.5% (invested amount).
Should one start rotating the older and smaller weighted stocks to different stocks or maybe average them? What thought process can go into deciding it.
I understand about conviction, but sometimes if itās already 100% up, averaging up becomes psychologically difficult. Similar for the 15% down.
