Analysing Financial Statements – Long Term Liabilities ( 5 of 6 )

In our continuation of our series of articles on Financial Statements, today we will touch on Long-Term Liabilities. The second classification of liability is called Long-Term Liability. As mentioned in my last article, a long-term liability is money owed by a business that must be paid beyond a company’s operating cycle. In other words, it is debt that is due beyond a one year period. Current Liabilities Debts that must …

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Understanding Financial Ratios

Numbers in the financial statements by itself gives us a decent understanding of the business. But as Albert Einstein mentioned, “All things are relative”. A business making $1million consistently may sound like a good business until you realize that the business requires $100million of capital to operate. Such a business only gives 1% return. We might as well put our money in long term bonds which carries minimum risk.   …

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Analysing Financial Statements – Liabilities ( 4 of 6 )

Hi Investors, Over the past 2 months, we have written articles to explain the components of a balance sheet which shows the extent of entity ownership of assets, liability and equity at a given point in time; a net worth statement for a company. Today we focus on Liabilities.  Liabilities are amounts of money you owe to creditors in the form of bills that are due, bank loans you have taken …

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How to Read Letters in Annual Reports

To help us put things into context, I want to share a story of a friend of mine, Bruce. Bruce is a brilliant entrepreneur and businessman. One of his cash producing business is a chain of retail shops selling mainly earrings. The story in summary is that Bruce left his job as an auditor at one of the Big 4 Audit firms and started his chain of shops, all starting …

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5/15/500 Stock Portfolio

I want to share with you the 5/15/500 rule I created for myself with regard to my stock portfolio.   The 5 years rule   The “5” in the 5/15/500 rule is a reminder to only use money you do not need for the next 5 years. As I already mentioned in the portfolio timeline guide, we must invest money that we need to use money within the next 5 …

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Analysing Financial Statements – Long Term Assets ( 3 of 6)

Hi Investors In our third article, we focus on long term assets (non-current assets). The long term asset category of a classified balance sheet appears immediately after the current assets. Non-current assets are assets that are not turned into cash easily, are expected to be turned into cash within a year and/or have a lifespan of more than a year. Classifications Of Assets On The Balance Sheet Current Assets Read …

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Assessing Business (Fundamental Analysis)

Welcome to the main investment method Business Analysis or fundamental analysis. The key idea of fundamental analysis is to analyze the stock for what is really is, a business.   In simple terms, this can be known as Business Analysis. Ultimately, when we buy a stock, we are in fact buying the business itself. To purchase an entire business can be very costly, so what the stock market provides for …

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Can Value Investing Really Work in Singapore?

There’s a whole host of evidence that value investing – buying a basket of shares at low valuation ratios – does work over in the USA. For example, there are studies done by investors like David Dreman, detailed in his book Contrarian Investment Strategies: The Psychological Edge, which shows that American shares with the lowest price-earnings ratios do outperform the market. Then, there’s also studies done by academics like the …

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The Game of the Stock Market

So how did the stock market started? I researched  and found studies showing that the stock market started in the 17th century where dealers met to buy securities in Throgmorton Street. There are also those who stated that it started earlier in the 12th century in France. There were even arguments that stock exchanges already existed in ancient Rome. Well, we do not have a knack for history, and unless …

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Analysing Financial Statements – Assets ( Part 2 of 6)

Hi Investors, We are into our second part of the articles focusing on important components of a balance sheet. A recap of a balance sheet. It is a snap short of the company’s financial conditions on a particular date. Conceptually, the balance sheet is based on the accounting equation, which states that the total amount of assets must balance the total amount of liabilities and owner’s equity. Assets = Liabilities + Owner’s Equity. …

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