analysis of corporate annual reports b.v.raghunandan
TRANSCRIPT
Investor Awareness Programme of ICWAI
Analysis of Corporate Annual
Reports for Common Investors
-B.V.Raghunandan,SVS College, Bantwal
SDM Law College,
May 28, 2011
Purpose
of
Analysis
• Academic Interest
• Investment
• Disinvestment
• Strength of the Co.
Nature of
Annual
Reports
• Manipulated
• Auditor-Management
• Made Complex
• Too many Details
• Voluminous
• Misleading
• SEBI is a Puppet
Deficiencies of
Accounting
and FM • Never Simplified
• Became Complex
day by day
• Greek Alphabets
• Accounting
Standards
• No Lakshman Rekha
• No guideline for
Healthy Practices
Guidelines for Analysis
• Investment in equity is long-term, but
corporate reports are temporary
• Ignore the opinions of all the experts as
they have a vested interest
• Traders will be active immediately after the
reports
• Do not take too many factors for analysis
• Identify a few factors for evaluating the
performance
Factors to be Considered
• Long-term factors and not short term
profitability
• Consider the Income Statement
• Consider the Balance Sheet
• Look at EPS
• Consider the growth in sales, profits
• Ignore revenue guidance
Sources:Income Statement
(Profit & Loss Account)
• Sources: Dalal Street/Capital Market (July or
August Issue)/Newspapers
• Website of BSE/NSE
• Website of TV channels or Money Control.com
• Websites of concerned companies
• Annual Report received through smail or email
•
Factors in
Income
Statement• Sales
• Profit from Operation
• Extraordinary item
• Surplus profit
• Provision for Dividend
• EPS
Factors in Income Statement
• Sales
• Costs
• EBITDA
• Net Profit
• EPS
• PE Ratio
Factors in Balance Sheet
• Ownership
Funds and Book
Value
• Loan Funds
• Debtors and
• Inventory
• Beta Factor
Limitations of Financial Statements
• Manipulation
• Interpretation
• Not Qualitative
• Future Potential
• AS
• Mix Up
Thank
You