Reserves are part of Shareholders Equity. Hence it is ownership. It is not an asset. The shareholders equity as well as debt which is seen on the Liability side of a balance sheet are deployed as various assets that you see on the Asset side of a balance sheet.
The share capital and reserves is the ownership (book value) of the business.
Interest and dividends received on bank balances and other liquid assets are shown in other income heads in p and l a/c
If I understand you correctly, reserves are not actually money kept somewhere. They may be already used up. Just that every year, [net profit - dividend] is calculated and added to reserves. Itâs not an actual transaction happening. If company has a 1000 crore reserves, itâs not actually money which they have which they can use in the future - itâs just an on paper figure most of which is already used up. Is this correct?
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Yes⌠the reserves are nothing but an account of accumulated profits. Out of the profits part is distributed as dividends. The rest is deployed for capex or working capital or investment. This part which is not distributed gets accumulated and shown as reserves which are due to shareholders.
Thank you very much.
Sometimes, I see company giving dividend more than itâs net profit. In such cases, I see that the reserves have gone down. But where does that money actually come from? Do they take a loan to give out dividends?
For e.g. see Maithan Alloys 2009
https://www.screener.in/company/MAITHANALL/consolidated/#profit-loss
If you see dividend is 883% of the net profit after tax. i.e. they paid out nearly 9x their profits as dividend. Where does this money come from?
You are right. If Dividend paid is more than profits, the reserves will reduce. In such a case the company can use the cash that it already has for pay out or it may generate cash by selling some investments and pay dividends or sometimes companies can borrow and pay dividends.
Most of the times payment of dividend higher than profits would be to return cash that is on the balance sheet which the management does not see any need for use in future or it could be when the company would like to maintain the dividend payments even they have a one off bad performance.
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How to calculate float of a general insurer from itâs balance sheet ? I heard we can calculate it by taking investments on account of policy holders from the balance sheet. Is this correct ?
I suggest you to carefully read this pdf.
insurance-and-float2.pdf (1.7 MB)
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I understand what is working capital. However, I donât understand why itâs given so much importance while analysing a stock. What kind of info can one get from Working Capital numbers? What good signs or bad signs should one look for?
I am looking at Yes Bankâs Income Statement in Morningstar
https://financials.morningstar.com/income-statement/is.html?t=0P0000AGMN&culture=en&platform=sal
There is a row âIncome (loss) from cont ops before taxesâ. The numbers on that row are just the same as the numbers in the row âTotal net revenueâ except in negative? Can someone explain this?
In the same page, there is also 2 rows for âOther Expensesâ. One labelled âOther Expensesâ & the other labelled âOther income (expense)â. Again, this is confusing.
Hi,
I am looking into invest in ETFâs as I donât have much knowledge on stock picks. I am planning to invest monthly 10,000 rupees and buy these ETFâs. I am looking at NIFTYBEES and JUNIORBEES as a way to participate passively in the market. I understand that this ETF represents NIFTY50 and NIFTY NEXT 50.
Please let me know, if these ETFâs are good to go or any other better etfâs available.
Appreciate in Advance.
I think in India ETFâs are still no that liquidâŚBetter to invest in Index fundsâŚboth serve the same purpose
To understand this old comment by Mantri, I am trying to calculate net current assets
Based on the sales figures, I figured out that the years he is talking about is 2009 to 2014.
Now from here http://financials.morningstar.com/balance-sheet/bs.html?t=VAKRANGEE®ion=ind&culture=en-US&platform=sal
2009
Total current assets: 72.8 crores (divide by 10 morningstar figures - they are in millions)
Total current liabilities: 15.4 crores
Net Current Assets: 72.8 - 15.4 = 57.4 crores (this sort of matches with the 55 crores he mentions)
But
2014
Total current assets: 1167 crores
Total current liabilities: 784.4 crores
Net current assets: 1167 - 784.4 = 382.6 crores.
Now this figure of 382.6 crores doesnât match with the 750 crores he has written. So what am I missing. Did I calculate something wrong?
I also compared my calculation for multiple years with the âWorking Capitalâ which is there the excel sheet exported from Screener.in & it doesnât match! So I am doing something wrong here.
Where can I find historical P/E values of a particular stock. For e.g if I need to find what was the highest P/E & the lowest P/E it has traded at in the last 5 years - where can I get this info?
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hello sir
I am new in investing. i want to attend agm. how i can go there ??
AGM is for shareholders of the company. Even if you buy one share of the company, you can attend the AGM. If you are a shareholder, you will get the notice of the AGM through mail. You can then attend the AGM. You can also track the companyâs disclosures to the stock exchange for the AGM dates.
In the cash flow statement, there are these 2 heads
- Fixed Assets Purchased
- Investments purchased
I assume Fixed Assets Purchased is investment in PPE.
What exactly is investments purchased?
Investments in Equities / Debt / Real Estate. Essentially, any investment that doesnât directly relate to the companyâs core business(es).
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I have a question regarding debt mutual funds. We have seen nav decresing because bad loans are written down due to credit rating downgrade and defaults. Are there any examples of nav increasing due to collection of bad debt. Since bad debt is usually written down 100 percent in debt mutual funds, even if they can recover 25 to 50 percent nav should increase substantially and yet even after searching i couldnât find any such situations.