What should be your thinking process when analyzing companies? This blog is not meant to give you a list of ratios, which you can use in order to analyze the performance of different companies. The purpose here is to help you think in unconventional ways and make your own ratios. You can have different ratios applied to different industries and even different segments of the same company. Let's take for example, the transport industry. Companies like CJ Darcl Logistics Ltd. have businesses of shipping your goods from one city to another and from one state to another. These companies work like ancillary companies , the reason being they give support to all other physical product based companies to deliver their products to where their customers exist. They usually use trucks to deliver a lot of products. Now, the question is how can I analyze the performance of this company. For, the transport industry I can use the ratio, revenue earned per 1,000 km, or profit earned per 1...

Whether to buy a house or live on rent? Life is tough and at times like this, you understand what is the importance of having a home. In this state not having a stable income and living on rent can combine to be your worst nightmare. But don't worry, we are here to evaluate a question which comes to the mind of many millennials and aged too. Should I put my life earnings in buying a house or should I live on rent and keep the lump sum money invested. Let's check that out. A typical scenario : Property on home loan: This is the approach that a majority of people take in order to buy their first home. There is nothing wrong in this, but we are here to check whether paying all that interest is making you financially better off or worse. So let us start with a typical example, wherein you bought a house for 50 lakhs and took a home loan for 20 years. Below is the loan structure: Keep in mind, we haven't considered the capital appreciation for the house. In gene...

How can numbers be deceptive when analyzing 2 stocks for investment? Most of the analysts commit this mistake that I am gonna be telling you about. There is one question that the analsyts forget to ask before giving one company an upper-hand over the other. See for yourself, whether you commit the same mistake or a question arises in your mind? So here it goes. Let us say there are stocks of 2 companies, A and B. Both have been operating under a duopoly, there is a strong competion between the two companies and more often than not, both the companies have close to 50% customers in the entire market segment. Seems like both are quite similar , right? I am giving you the below numbers(imaginary) , see if you can now decide which company is better in terms of less risk for your money and more ability to raise funds and acquire the customers of the other company. Company A - Assets: Land - 55,000 , Machinery - 40,000 , Current Assets - 15,000         ...

What is the liquidity drawback in a debt scheme? Well, as people say you learn from experiences, it turns out, you do. I was a lover of debt schemes that used to give constant returns of 9-11% on your investments. By debt schemes, I mean investing in debt mutual funds. But soon after Franklin debt schemes closure happened, I just realized I was not allowed to withdraw or invest any more in their fund. Amidst the worsening economic situation, a lot of investors started to pull out there money and it put huge financial stress on Franklin. There were many debt schemes that were stopped and these schemes had an asset under management of close to 31,000 crores. My money was stuck and so was other investor's money. I am grateful to my mentors that I know the importance of diversification and this didn't impact me much. But where do you think I went wrong or why did the company fail to repay the money back to investors, when demanded? This is where I went wrong and I...

How can budgeting make you grow your money and help become financially free? A lot of time I come across people who have big cars, apartments in big cities, luxury watches and all of the stuff which you might think can be afforded by only someone who earns at least a couple of hundred thousand dollars a month. But the sad reality is that they have taken debt for such things and fallen into the vicious debt cycle. Because in today's world you can get debt for anything. This debt not only takes away your sanity and peace of mind, but it also sucks away all your earning because eventually, you are paying off more money in form of interest for something which is not worth that much. This problem arises mainly due to not budgeting all your expenses and incomes and not being aware of where your money went. Today, I just want you to take away from this blog how you can manage your money in a well-designed manner and can achieve financial freedom in a matter of a few years. ...

What is mezzanine financing and why are companies using it to fund expansion plans? Do you own a startup? Have you been finding new ways to borrow capital for expansion? Do you lack the collateral to borrow money from banks? I have come up to update you about this amazing source of financing which is being used by many growing startups to help them in their journey of building their companies and making an impact on this world. Before I explain to you what mezzanine financing is, let me familiarize with the below 2 terms: Senior Debt: This is the debt that holds priority over all other loans the company might have as well as over the equity shareholders. This means they get paid first when wounding up the business. Equity: They are the shareholders of the company and own shares of the company which gives them ownership for the corresponding shareholding. Equity does not carry any fixed interest and therefore has the highest cost of financing. Because even if the company...

What is passive income? Passive income is that source of income that comes in your bank account even if you have little or no involvement in the source of that income stream i.e. you might be chilling with your family or friends at a hill station and your bank account would still keep getting credited each and every day without you being actively involved in the setup from where the income arrives. Passive income is a way to make your money work for you or your one-time efforts give you a sustainable income for a long period of time. You need to start building these sources as soon as you can. This is a sure-shot way to create a side hustle and quit the 9 to 5 race before 40.  What are the sources of passive income? Hardcover books and Ebooks: With some efforts put in initially you can create great content for a certain audience by putting it in an e-book or hardcover book. With Amazon KDP, publishing your books is just a click away. One can earn for a long time from ...

How perspective changes the way you see numbers? What if I tell you that you are to build a company which has a sales of 24 crores every year. It seems a bit difficult to visualize, right? Do you know why because you directly saw the big picture without taking into consideration the product, the plan, and the timeline to achieve the same. Similarly, when you want to manifest big goals, breaking them down to achievable small tasks is the only way to feel that it's actually not that difficult. Let's take big basket for example. Big basket started in 2011, so it's a 9-year-old company. What if someone told Hari Menon(the founder) that you are to deliver grocery to 2 lakh houses in a month when he just started his company. He would say not today I don't have the capacity, but definitely one day. Do you know how many houses he delivers groceries to every single day? See for yourself: Clearly, delivering to 2,97,440 houses in a single day is difficult to visu...

What is affiliate marketing and how to use it for generating revenue? There are hundreds of ways that people use to earn money online. One of the ways is affiliate marketing, which usually people say is the best way to earn money even while you sleep. This is something which is being practiced all around the world and you might not even know but you are probably paying huge sums of money to these marketers. The usage of affiliate marketing is so widespread that affiliate programs are being used by individuals, small bloggers, micro-influencers, youtubers, celebrities and even big enterprises. What is affiliate marketing? Have you ever wondered while reading an article or blog post online that why do these writers include links to different products (websites, softwares, books, tools etc.) or when you watch a youtuber's video, why do they include links to all the equipments (camera, mic, gopro, gimbal, lenses etc.) they use in the description box. Well you will get...

What is scalability and why is it necessary to check this aspect when starting a new venture? The craze for being independent, escaping the 9 to 5 rat race and starting self-owned business startups has risen tremendously. The craze prevails among young as well as experienced professionals. The good thing is that a lot of people can now fulfil their dreams because all you need is an idea, since getting resources is a lot easier than before. However, there is one important aspect that one's idea should be checked for. It is scalability, yes, scalability. No one wants to limit themselves to just one particular geographical area and survive for a living. An idea should be such that there is a huge growth potential and that expanding to a new location is possible at feasible costs. A lot of people start their business and are stuck in a locality because of having a product that can be sold only to some kind of customers. For eg. If you want to sell a local cuisine which i...