Finmazing

Are you spending more than you want? Then this blog is specially for you. Many Indians live from paycheck to paycheck and don’t have much money to save. Sometimes, this is due to low income but in majority cases it is because you earn little and spend more. Figuring out how to cut spending is not as easy as it sounds. Here are 10 questions that you should ask yourself before making any expenditure.   Question 1: How happy will the product make me? When most people buy something, they look at the price of the product and consider whether they can afford it or not. But, in reality before buying a product consider how much happiness will the product provide you. Your focus should be on long term happiness, since next month you can regret what you bought today. Our aim should be to maximise happiness per rupee spent. Nowadays, humans do not buy a product for happiness, but they buy a product just because their colleagues/friends have purchased it. For example: When a child se...

What is a Profit and Loss Statement (P&L)? The profit and loss statement is a financial statement that summarizes the revenues and costs incurred during a specific period. The P&L statement is synonymous with the income statement. These records provide information about a company’s ability or inability to generate profit by increasing revenue, reducing cost or both.   Understanding how to analysis P&L Statement The P&L statement is one of the three financial statements every company issues quarterly and annually. It is often the most popular statement that investors analyses before investing in a company. But how should one analyze P&L statement? The book “Warren Buffet and Interpretation of Financial Statements” guides us how Warren analyzes P&L Statement to identify company with durable competitive advantage. Without further ado, here is a summary of the book   1) Revenue : Where money comes in The first line of P&L Statement tells us about total ...

What is a 100 bagger stock?  These are the stocks that return Rs 100 for every Re 1 invested. It means your Rs 10,000 investment turns into Rs 1,000,000. Sounds interesting right? The real question is how can one identify the next 100 bagger. Luckily, Chris Mayer (CIO of Woodlock House Family Capital) conducted a research of 100 baggers between 1962 and 2014 and the result of his analysis is available in his book “100 bagger: Stocks that Return 100-to-1 and How to find them.” Without further ado, here is a summary of how to find next 100 bagger 1)Growth, Growth and more Growth Almost all 100 bagger in the history were substantially bigger at the end than they began. So, look for companies with growth and lots of growth potential. But be careful and looks for companies with ‘good growth.’ There is no use of investing in a company which has doubled its sales but also doubled its outstanding shares. Likewise, if a company generates lots of sales by cutting prices and driving down its ...

There are numerous financial  metrics that an investors needs to check before investing in a company. If you're not tracking profitability ratios of a company, you probably should be. Read on for a breakdown of what profitability ratios are, their importance, various types of profitability ratios and how to calculate them.   What are Profitability Ratios? Profitability ratios are financial metrics that helps to evaluate the ability of a company to generate profit relative to its revenue, operating costs, assets, and shareholder equity during a specific period. They are used to evaluate the company’s ability to generate income as compared to its expense and other cost associated with generation of income during a particular period. They indicate company’s overall efficiency in using its assets to generate profit and value for shareholders.   Why are profitability ratios important? The sole purpose of commencing a business is to earn profit. In other words, the sole p...

  What is a Moat? The dictionary meaning of moat is a deep, broad ditch filled with water that surrounds a castle historically to provide a preliminary line of defense. It was like a ‘safety arrangement’ built around the castle in ancient times. Moat serves to protect those inside the fortress and their riches from outsiders. The wider and deeper the moat, more protected is the castle. It acts as an obstruction for the attackers to get access to the castle. How can Moat help us in stock investing? Assume that the company in which you are willing to invest is a castle. Prosperous castles are always subjected to attackers which try to take away the riches of the castle. Attackers here refer to the competitors which force the company to lower its margins and profits. Moat helps to protect the castle from the attackers. Moat here refers to the competitive advantage that helps the company to protect its margins and profits. Why is Moat necessary for a company? Moat is a characterist...