Everything looks gloomy and now the question is when everything will be back to normal.Is there any clue we can get from history or learn anything from it?I cam across really nice article on some of the biggest bubbles as well as crashes in last 3-4 centuries. Check this link for more details on the same (more…)

Financial stability ratios:These ratios are useful to check inherent financial strength of company and it’s cashflow patterns.
a) Debt-Equity ratio:
Debt-Equity ratio = Total Liabilities / Total Share Capital
This ratio provides leverage situation of company in the sense that it compares company’s total liabilities to total shareholder equity.
Broadly speaking, it should not be much higher (should not be greater than 2 or 3, there are exceptions like financing stocks)
b) Interest Coverage ratio:
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but mere talk leads only to poverty.* Laziness: A sleeping lobster is carried away by the water current.* Earnings: Never depend on a single source of income. [At least make your Investments get you second earning]* Spending: If you buy things you don’t need, you’ll soon sell things you need.* Savings: Don’t save what is left after spending; Spend what is left after saving.* Borrowings: (more…)

I happen to work in the technology sector, but has a niche for finance. Well I’m not an expert by any means, but couldn’t ignore the current market histrionics either. So I decided to dig more on this subject and explore what led us to this sudden debacle of the world markets.Over (more…)

when FII holding is high; stocks are more volatile in nature (or have high Beta); this statement is not always true. Are MFs dumping stock? If yes then why? Is it amongst last stocks on any benchmark (like NSE, BSE 200) in terms of market cap? i.e. say according to market cap if this stock is somewhere at no. 195 in BSE-200 list, then you are taking significant risk for buying this company. If this stock gets out of index then there will be significant selling by index funds. Order book and Earning Estimates. Industry outlook and Peer competition. Is it hard to create business model or hard for new players to enter? (more…)

Ok all set. But before we start, few important terminologies that we need to understand. Some of you might be already Guru’s in finance and can skip this part, but as I said the sole purpose of this blog is to explain Finance in a very simplified way for people with no background (more…)

I discussed inflation in my last post. I thought of discussing it in a little more detail to give you the complete picture.As a child I always used to wonder why the world has so much of poverty. Can’t the Central Banks simply print more money and donate it to the poor? Pretty simple (more…)

1. Don’t know exact no. of companies which are having positive cash flow and positive book value and having sales less than Rs. 5 Cr. If they are say 1000, then obviously we need to rethink here … This actually is biggest risk for this theory. (It will be really great if someone suggests website which can facilitate this kind of number crunching?) (more…)

Last week I discussed about the problems with printing money, as it drives up inflation. Today I’m going to discuss a method called quantitative easing – or a situation in which the government resorts to printing money to restore growth in an economy. But to understand quantitative (more…)

Ok I’m back again after some time. Had to take a break from writing because of project pressures. Today I’m going to discuss an interesting topic – Hedge Funds.Infact one of the major reasons for the latest debacle of the financial industry can be attributed to the Hedge Funds. So (more…)