When to use Price/Sales to value companies?

One of the most popular measures of valuations in the stock markets is the P/E ratio or the Price / Earnings ratio. It essentially measures what the market is willing to pay for every rupee earned by ...
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What is the link between the ROE and the P/E ratio?

Have you ever wondered why is it that companies with high ROE tend to have higher P/E Ratios? Take the case of sectors like FMCG and to a lesser extent IT and pharma. While IT and pharma have seen the...
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How quick ratios give a better picture of a company's health…

Working capital management in a company is all about a trade off between the current assets and current liabilities of the business. Typically, current assets and current liabilities get created in th...
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How to evaluate the working capital of a company?

When we talk of company evaluation, most of us tend to get caught up in the big picture. Capital structure, fixed assets investment, borrowings, net worth, ROE, ROCE; these are the issues we normally ...
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Dividends versus buybacks – which is a better choice?

When TCS announced its second round of buyback of shares worth Rs.16,000 crore, it has once again raised the debate on how should companies in India reward shareholders. Broadly, there are two ways of...
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Can you monetize your shares without selling them?

Over the last 10 years you have painstakingly created a solid equity portfolio consisting of a mix of blue chip stocks and quality mid cap stocks. Your portfolio value has multiplied and you realize t...
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Short term returns versus long term returns: How to balance?

Returns on investments are for the short term and the long term. Some investments generate trading returns in a very short span of time. Some investments like Wipro and Havells can give phenomenal ret...
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Bonus versus stock splits – How they compare?

Do Bonus and stock split create value for shareholders? Let us start with the unbelievable story of how Wipro created wealth over the years. Had you bought 100 shares of Wipro in 1980 at a price of Rs...
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Understanding the link between ROE and ROCE in analyzing stocks…

In the world of finance there are a good number of ratios to evaluate companies. There are profitability ratios, efficiency ratios, solvency ratios and liquidity ratios. Within the gamut of profitabil...
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10 questions you need to ask about a company’s fundamentals…

If you are an equity investor what would you typically rely on? You would rely on a research report or on technical calls. Let us leave out technical calls for the time being as our focus is more on l...
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