FUNDAMENTAL ANALYSIS/VALUE ANALYSIS

 

FUNDANENTAL ANALYSIS/VALUE ANALYSIS. 

Analyzing the financial indices to determine the health of the business just as in the case of the example below. Is good to look at this indices for the past five years. 

-TURNOVER 

-NET PROFIT   -BEFORETAX

-NET PROFIT AFTER TAX. 

-DIVIDEND DECLARED/PROFIT SHARE 

-DEBT/BANK BAL

-CASH SALES(Get from cash flow

-CORPORATE GOVERNANCE /BUSINESS SUSTAINABILITY. 

-RISK MANAGEMENT STRATEGY 

When this indices are positive and there are no future potential danger.

SEE EXAMPLE

FINANCIAL 

TURNOVER/SALES-2,000,000

Cost of sale:100,000

Gross profit 1,900,000

Admin And Exp 900,000

NET PROFIT B/4 TAX. 

1,000,000

Profit after Tax 700,000

 

Cash bal:1,000,000

Equity/Total asset:5,000,000

PROFIT AFTER  TAX

700,000

CASH BAL=1,000,000

Equity /Total  asset

5,000,000.

Current debt=500,000.

What is the return here say=700,000/5,000,000 =14 percent

The company seems to have  good return of 14 percent. 

The cash balance is good because it could cover bad debts looking at the profit/return cash flow over the past 4-5 years will help you to see a good track records. 

Also is good to look that there is no regulatory problem/risk with the business. 

Looking at  potential of  business continuity  risk Just as the case of Kodak. 

  

SEE MORE

Disclaimer: Obi Azubuike is not by this publication acting as a professional advisers and therefore not liable to any  damage whatsoever for your acting or refraining to act based on  this publication. Consult your professional for advice. 

copyright(c) 2020-Obi Azubuike

 

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