When a company spends capital in buying PPE or constructing the PPE, that expense is not recorded in the P&L statement. Instead you depreciate that expense across multiple years. That is depreciation. Depreciation isn’t maintenance expenditure.
For e.g. you spend 10 crores today in building a factory. It never gets recorded as an expense. Instead let’s say you depreciate it over 5 years straight line. Then for 5 years, you will show 2 crores in your P&L.
Can any one explain How is Sensex Calculated,
As on 07 February 2020, the full market capitalisation of SENSEX was about 76,11,200 crs. while its free-float market capitalisation was 43,27,280 at the same time Sensex was 41,141.
Can any one explain how to arrive 41,141 based on above information?
Auto companies (OEMs) sell their products through dealers. In India, the monthly sale figures released by OEMs are shipments to dealers, not the final sales from dealers to end customers. Since the OEMs have influence over their dealers, they can “dump” their products onto dealers and show higher sale numbers during tough times. But if the end customers are not buying, inventory at dealer’s end would increase. “Stuffing the channel” like this can work for a month or two but in the long run, it is not a sustainable strategy since there is a limit to how much the dealers can take. Tracking inventory at the dealer’s end therefore becomes important for the analyst to understand the true sale picture of the company. If the inventory is above normal, it is not a good sign and indicates channel stuffing / lower OEM sales going ahead.
Thank you for taking time to answer but my question is how to read this time period 4 to 5 weeks dealer inventory ?
This has to be compared with what is their normal level. If you go through some of the previous call transcripts, it may be available somewhere.
Simple Scuttlebutt (on the ground) idea would be - to call few Bajaj Dealers in random Cities and that would give you a pretty clear picture of how to read that. In general, 4-5 weeks of inventory is not much (normally all auto dealers maintain 2 months of inventory), apart from when there are offers/discounts running from the OEM’s.
It is also important to know how was this 4-5 weeks calculated? Calculated using the sales rate of June 2018? June 2019? March 2020? So, it is very easy for companies to hide or be innovative with these type of numbers (which are not set in stone). So, look at the numbers and along with it look at the management. Do you trust the company and what they tell?
India seems to have a forex of 474 billion dollars.The gov has estimated the bill from covid to be from 100 to 150 billion dollars(of course in indian rupees).Why cant India use it’s forex,i.e sell it’s dollar reserves to fund this expenditure.Surely forex market has atleast some liquidity?
Yeah. Bajaj auto has given these numbers during their FY 19-20 Q3 concall in Feb 2020. So no reason to believe these numbers today as the showrooms itself are closed.
I don’t know what exactly “a bill from COVID of 150 billion dollars” means but it is not that the government has to issue a cheque of that amount to somebody. It may be a loss of output or tax revenues or something else; I am not sure what it is.
That said, the way government finances work is different from the way they do for individuals. The government first decides how much it wants to spend, and then decides how the spending will be financed, such as through tax revenues, market borrowings or printing money.
The size of forex reserves has nothing to do with it directly. The forex reserves may only be used for critical forex payments such as loan repayments to multilateral agencies like IMF or World Bank, oil or defence imports and so on.
I was referring to the industry heads asking for a stimulus of 9- 10 lakh crore.
Credit agencies say that indian public debt is already too high.They believe it will go up from 70 percent of gdp to 76 percent due to covid crisis.
Okay, understood. My personal opinion is that not a dime of stimulus needs to be given to these people, at least not yet. There are many reasons for this - economic, political, ethical & moral but I will state just one. Most of the benefits of stimuli get cornered by people who need them the least, with the cost borne by the rest. It’s a sad state of affairs if the industry does not have the strength to survive one month of lockdown.
Hi everyone, a really basic question. I want to understand how exactly partial selling works when an averaging of buy price has taken place. Let me elaborate by doubt with an example:
Say I bought 10 shares at price 10 rs each. Next week I bought another 10 shares, 20 rs each.
So i have 20 shares worth 300. Avg cost = 300/20 = 15
Now say I decide to sell 10 shares at 25 rs. And still want to hold 10 shares. So which ones will be sold here and which one will stay in the account? The ones bought I bought earlier at10 rs or later at 20 rs? Or is there a way i can choose which lot i want to sell?
Can someone help me by providing a live example in finding out how banks/nbfc raising capital at high P/B or ROE leads to lesser dilution compared to low P/B or low ROE?
it’s really your choice of how yoy like to account for it. Normally i think FIFO method is the most widely used one.
Personally too, Based on cash flow, i feel FIFO method is logical and justified.
So when you have sold 10 shares
under FIFO, your cost for 10 shares was Rs. 10 and sell price was 25. Hence profit is 15.
but now the cost price of remaining 10 shares is 20 (and not the average 15)
Hi everyone, I feel happy to be finally joining this forum where enlightened people share their views and guide novices like me. Could someone please help me where and how can I start learning about the basics of investing considering I am a beginner and want to start investing in stocks for long term for financial freedom. I have already been investing in MFs since the last 5 years and want to now learn the basics of investing and how to pick and invest in stocks.
@shobhit - There are multiple ways to learn investments -
Most important thing is that you have in be zone of investments and get yourself surrounded by successful investors. Follow successful investors on Twitter, Instagram, subscribe to video channels that share knowledge on Stock Markets. This way knowledge will be pushed to you and will be able to learn topic by topic.
Good luck for you journey ahead !!
Does anyone know how are AGM’s going to be held this year?
Also is it compulsory for companies to stream the AGM?
Hello
I heard S. Naren of icici AMC yesterday saying that he thinks it’s a very good time to invest in debt since there is panic in debt markets.
Would he have meant good time for AMC or for investors. Could you describe some scenarios (maybe like current one, where everybody wants to redeem debt funds) where investing in a debt fund might give better returns. Also, if I could be pointed to some resources on understating debt investment options in India (other than FD, ppf)
Thanks
