Why are growth in reserve and surplus so important and how do I know a company has a very good reserve? What is the bench mark?

More at: r/NepalStock by Ill_Difference_8144

  1. it will indicate growth of share price by roughly 20% if distribute 50% dividend then gowth of share price will be by 10% (20*50% retained). tara Nepal mah yo sab kaam grdiana bs finance kinnu kitta kam xa circuit lagxa ????????????????????

  2. and last point growth in reserve roughly predicts growth in share price of company (as per fundamental analysis) supper growth of company is 20% and company retain all earning and doesn’t distribute dividend .

  3. and for shareholders point of view its shareholders property and everyone like to see their property to grow and since company reinvest the reserve the compounding effect can be seen in shareholders networth as well as companies growth and valuation.

  4. growth in reserve is very much important for both company and share holder points of view. For company’s point of view it can use the amount in reserve for business growth /grabbing business opportunities new line of business new product or etc 1/2

  5. Where did you get this idea that growth in reserve is so important? I think in many cases companies esp. banks and insurance companies have reserve because they have to set aside certain profit into reserve funds.
    Now, having reserves in no way a bad thing. Up to a certain level, it’s a good thing in order to cushion against expected and unexpected expenses. Reserves are assets, so who wouldn’t want assets but those money might be better invested elsewhere…… in that sense, whole premise of your question is bit off the mark. Bench mark… vanda ni what’s the minimum reserve fund that e.g. banks/insurances are required to keep might be the relevant info…. as one can assume that those who fail to do that are doing badly.

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