Extreme amateur here. What do you guys consider as major indicators for wanting to invest in a company? For eg: Does it necessarily mean a company is bad if it has negative reserves? I do realize that it means the company has suffered losses but it can still move forward right, considering the capital work in progress is a nice number?

More at: r/NepalStock by Rj__Ace

2 comments
  1. Just looking at number doesnt give any idea if you want to get benefited from balance sheet read annual reports everything is written there in more details you can get more outlook of what company do and what are its future planning. Even the reason behind numbers are discussed. One quarter earning and reserve is only useful for those entire investment is made on pe and eps.

    In Nepal even bad company are quoted at extreme valuation so avoid them stick with fairly good companies above industry avg which are showing good growth in last few yrs.

  2. If you are still new to stock market, perhaps you should first be clear about what are you goals.

    e.g.

    long term investments or short-term investments. Forget about trading for now.

    So, if you are going to invest for long-term, you will obviously want to pick the good companies, which will still be in operation after 20 years and in good health.

    Now, how to know such companies. Read e.g. sharesansar. News outlets like them always write reports on various companies.

    For short-term investment, you have to keep abreast of latest developments e.g. bonus shares, right shares, dividend, takeover/acquision etc. It variously entails more risks but can provide good returns as well.

    Here’s the thing. I don’t know you want to understand financial reports when all indicators are already out there and even provided by sites like sharesansar, nepalpaisa, merolagani.

    reseaves alone mean nothing as you have also mentioned about it. financial figures are all relative as in one has to look at those figures in relation to other figures. hence, we have ratios. the most common ratios are eps, p/e, p/b etc.

    I would say if you want to learn about financial reports, try to first understand how EBIT is calculated/what it’s composed of. It’s fairly easy calculate/understand and it gives a wholesome picture of how company operates/has operated. that should be the first step for the beginners.

    I am writing to this from the top of my head and at one go, so any unclaries rest on the reader himself/herself 😀

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