The business that can be easily understood
You must choose the business that can be understood by you. When it can be understood, you will be able to identify the business activities and its operation in the company such as how they make a sale or where their payment went.
The business has a favorable long term prospects
This shows that the company will be expanding their businesses such as franchising and continue providing new services that more and more customer will be attracted therefore increased their profit in the long run.
The business has a good management team
It means that the top management such as the CEO, CFO and their employees are able to perform their job with integrity and having good corporate governance towards its stakeholder. It also proves that the company has a good internal control which can prevent the company from fraud.
The business has attractive pricing
This shows that the company is able to increase their price of products without losing market share thus proves that they will have a high profit margin.
Showing posts with label Equity. Show all posts
Showing posts with label Equity. Show all posts
Thursday, January 1, 2009
Saturday, December 27, 2008
What is Common Shares?
Common Shares are representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company's success through dividends and/or capital appreciation.
In the old days when we traded shares, we will receive a share certificate but with the advancement of IT, it has been eliminated. This is the example of Share Certificate:
The minimum of shares we need to invest is 1 lot that is 100 shares.
Most of the time people think that the more we have is the better and actually
“It is not how much of shares u own and is actually how much % of the company u own”
Calculation:
If u have RM 2000 to invest
Company A: (Share Price=RM 2.00 Volume=20Million)
U can get 1000Shares=10lots
By taking the market capitalization (Share Price X Volume) = RM 2.00 X 20Million = RM 40Million
Amount invested/ Market capitalization = 2000/40M =0.005%
Company B: (Share Price=RM 20.00 Volume=1Million)
U can get 100Shares=1lot
By taking the market capitalization (Share Price X Volume) = RM 20.00 X 1Million = RM 20Million
Amount invested/ Market capitalization = 2000/20M =0.0110%
The % u has in company B is higher although the lots u have is lesser.
Remember that having common shares means that u are one of the company’s owner and it is determine by the percentage u r having.
In the old days when we traded shares, we will receive a share certificate but with the advancement of IT, it has been eliminated. This is the example of Share Certificate:
The minimum of shares we need to invest is 1 lot that is 100 shares.Most of the time people think that the more we have is the better and actually
“It is not how much of shares u own and is actually how much % of the company u own”
Calculation:
If u have RM 2000 to invest
Company A: (Share Price=RM 2.00 Volume=20Million)
U can get 1000Shares=10lots
By taking the market capitalization (Share Price X Volume) = RM 2.00 X 20Million = RM 40Million
Amount invested/ Market capitalization = 2000/40M =0.005%
Company B: (Share Price=RM 20.00 Volume=1Million)
U can get 100Shares=1lot
By taking the market capitalization (Share Price X Volume) = RM 20.00 X 1Million = RM 20Million
Amount invested/ Market capitalization = 2000/20M =0.0110%
The % u has in company B is higher although the lots u have is lesser.
Remember that having common shares means that u are one of the company’s owner and it is determine by the percentage u r having.
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