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Important ratios for stock analysis

Important ratios for stock analysis PE ratio:- PE ratio also known as the price to earning ratio and very famous between the investors. Investors use this ratio with other ratios or data to find out undervalued stocks. Read moreEarning per share:- In simple meaning it means “distribution of company’s profit between each shares” it can be used as the indicator for determining company’s profitability. It is best to use PE ratio and Earning per share comparatively.Return on Assets:- Is company using its assets effectively to generate income, yes or not? This ratio tells us the truth. This ratio gives us idea about management efficiency or capability to run company profitably. It compares company’s earnings as compare to its assetsDividend payout ratio:- It means “amount of dividends paid to stockholders relative to the amount of total net income of a company” Dividend payout ratio = Dividends / Net Income.Retention Ratio:- What company will do with its earnings, either it distribute to it…

Best beginners books on share market

In stock market you have two ways of learning- first, go invest your money and lose it and learn from your mistake and second read the books written by successful investor and learn from their experiences. Reasonable man will select second option because it is time saving and most important money saving.
There are some basic books for the stock market. Beginners shall read them.
Warren Buffett and the Interpretation of FinancialStatements. I recommend this book only for beginners because after reading this book you get a better position to understand financial terms of balance sheet and it is very helpful to evolve common thinking about stock market and which company is best to invest?


1. The Intelligent Investor: The Definitive Book on Value Investing
Written by Benjamin Graham. You can say that it’s a holy book for stock market. Author of this book was one time mentor of Warren Buffett and the main focus of this book on value investing. The concept of value investing evolves from this. …

Kinds of Shares

Kinds of SharesMost of the investors didn’t concern in which type of share they were investing and because of that sometime they ends in wrong place. It is best for every investor to know about all type of shares because different shares are subject to different risks. Every investor can tolerate different level of risk and by knowing that they can chose according to their risk potential.
The Share-capital of a company limited by shares, formed after the commencement of the companies Act, 1956 or issued thereafter consists of two kinds of shares: Preference shares:- Such shares enjoy preferential rights like payment of dividend at a fixed rate during the life of the company, and  the return of capital on winding up of the company. Normally preference share holders do not enjoy voting rights like equity (common share) holders but they have voting right in distinguish circumstances. Read MoreEquity Shares (also known as ordinary shares):- It’s a very common form of shares and first choice…

10 common mistakes in the share market by beginners

10 common mistakes in the share market by beginners:-Mistakes? way of learning. Always learn from your mistakes, take a responsibility of own mistakes and try to avoid it, it shows high morals of man. But in share market, one thing always keep in your mind that mistakes in share market never be forgiven. So it never be good to commit any error, always try to learn from others. Maybe after your own mistakes, you would not able to stand again.
There are 10 very common mistakes in the share market by the beginners:-
1. Looking on stock market as a tool of making quick money:- Beginners enter in the share market with the mindset that “share market is gambling and they can make quick money here” it’s wrong mindset. They mix Gambling with share market that is not right and it dishonor the share market and create bad reputation on others mind. In the gambling you put your money in bets but in share market you invest on companies. And with some basic knowledge you will never lose.
So if you are h…

What is Preference Shares and its kinds?

Preference Shares:Such shares enjoy preferential rights like payment of dividend at a fixed rate during the life of the company, and  the return of capital on winding up of the company. Normally preference share holders do not enjoy voting rights like equity (common share) holders but they have voting right in distinguish circumstances.

A company may issue the following types of preference shares– Cumulative Preference Shares: If company failed to pay dividends in previous years then holders of that shares have first right to receive that dividend if company decided to pay dividend in near future. The accumulated arrears of dividends shall be paid, if any dividend is declared in subsequent years, before any dividend is paid to the equity share holders. It must be remembered that all preference shares are always presumed to be cumulative unless the contrary is stated in Articles or the terms of issue.Non-Cumulative Preference Shares: Holders of that type shares receive dividends on yearl…