Understand Stocks

Understand Stocks | The 10 Most Important Things to Understand About Stocks

Understand Stocks

Understand Stocks If you want to buy stocks, you do need to Understand About Stocks and understand the company's history and potential. You also need to know whether the company is a growth company or a value company.

Growth companies have a strong possibility of increasing their cash flow, therefore, they usually pay more dividends.

On the other hand, value companies usually lack in cash flow, therefore, they pay fewer dividends. These companies provide no guarantee of future growth.

Therefore, it is important to first check if the company is viable or not before buying its stocks. There are a lot of risk factors involved and you also need to research the stock thoroughly.

Do some research on the company's background and understand the risk factor involved. To do that, you need to study its financial statement. Besides the financial statement, you also need to understand its quarterly earnings report and stock performance from previous quarters.

1) EPS (Earnings Per Share)

The most important thing that makes a stock valuable is the EPS (Earnings Per Share) of the company. The EPS of the company is basically a projection of the earnings of the company for the previous year divided by the number of outstanding shares. The EPS of the company is usually released quarterly. You need to understand the quarterly EPS of the company to know whether it is likely to increase or decrease in the next quarter.

2) Dividend Of The Company – Understand Stocks

The second important thing which makes a stock value is the dividend of the company. The dividend of the company is a cash dividend paid to the shareholders by the company. The cash dividend is mostly paid out to the shareholders based on the annual earnings per share.

3) Bonus Or The Special Dividend

The third thing which makes a stock valuable is the Bonus or the special dividend of the company. The bonus dividend is a special dividend paid to the shareholders by the company. In the case of many companies, the bonus dividend is paid in cash as a cash dividend on the 1 st of the month of the quarter or the quarter's end and in other cases, the bonus dividend is paid in property or other assets of the company.

Also, you need to read the balance sheet of the company. The balance sheet shows the assets and liabilities of the company. You need to understand the assets and liabilities of the company to know whether the company is generating enough cash or not.

4) Sales

The fourth thing which makes a stock value is the sales of the company. Sales of the company show the number of products or services that the company sells. You need to understand the sales of the company to know whether the company is generating enough cash or not.

5) EBIT (Earnings Before Interest and Taxation)

The fifth thing which makes a stock valuable is the EBIT (Earnings Before Interest and Taxation) of the company. The EBIT (Earnings Before Interest and Taxation) of the company is the profit after taxation of the company. The Earnings Before Taxment (EBIT) of the company is usually provided to investors after the tax effect of the earnings of the company is taken into account. You need to understand EBIT of the company to know the current tax effect of the company's earnings.

6) Dividend

The sixth thing which makes a stock valuable is the DIVIDEND. The dividend is the periodic payment made to shareholders of the company. The dividend is usually paid in cash. The dividend is one of the most vital factors which makes a stock valuable. You need to understand the dividend of the company to know the current dividend of the company. Also, you need to understand the dividend of the company to know whether the company's cash flow generated is enough or not.

7) The Market Value

The seventh thing which makes a stock valuable is the MARKET VALUE of the stock. The market value is usually the price of the stock on a certain day. The market value is usually taken on the last trading day of the previous week. Also, you need to understand the market value to know whether the stock of the company is undervalued or not.

8) P/E (Price/ Earnings Ratio)

The eighth thing which makes a stock valuable is the P/E (Price/ Earnings Ratio). The P/E ratio is usually obtained by dividing the current earning of the company by the last year earning of the company. The P/E ratio of a stock is usually given to investors who buy stocks of the company.

9) News

The ninth thing which makes a stock valuable is the NEWS. The news is the positive or negative developments of the company. The NEWS is the reason why the investors of the company buy the stock of the company.

10) Returning Balance

The tenth thing which makes a stock valuable is the RETURNING BALANCE of the company. The returning balance is usually taken on the balance sheet of the company to know the company's ability to pay its debts. Also, you need to understand the returning balance to know whether the company's current debts are sustainable or not.

11 & 12) The PROFITROPIUM And The PROFITROPY

Also, the Eleventh and the Twelfth things which make a stock valuable is the PROFITROPIUM and the PROFITROPY. Profit transparency is the ratio of the net income to the net assets of the company. Also, the profit is the net profit of the company divided by the net assets of the company. The profitative is usually taken on the balance sheet of the company to know the company's ability to pay its debts. Also, you need to understand the profitative to know whether the company's current debts are sustainable or not.

Hence,

I hope you get to understand these terms and things.

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