Today, we can’t find any single company which has a perfect record when it comes to investing in their stocks. It seems as if it is hard to find a company share which can show a linearly upward trading trend on any of the renowned stockbroking platforms.
A lesson of how to protect ourselves and our hard earn money before it gets shattered.
Today here, I on a very serious node going to deliver you some of the major sore points that you must watch out before investing in any stock market.
Emigration of upper management:
Leaving off any member from the upper management is an alarming sign for all the investors. It’s an indication for all stock market traders and therefore needs to determine the actual reason behind their walk out. because It may be a sign that the delegates at the higher authority know of something going to happen within the organization or it may be for some regulatory issues.
Here, in Quidsi’s case, their finance chief left the company in March which could be considered as a crucial sore point while investing for Quidsi Stock.
Debt a key parameter that must be taken into consideration before investing in any online stock. Debt of any organization can be curated from their debt-to-equity ratio. This debt-to-equity ratio may seem varying depending upon the sector you are dealing with.
For example, Shiping industries always have a high debt-to-equity ratio in comparison with an IT industry.
Inventory an asset or a sore point:
Many online stock traders look inventories as a company’s assets and in most cases they are true. However, in many cases inventory may also cause hindrance against company’s future earning if they are not sold out.
Similar can be taken in account for Quidsi when Amazon has repositioned Quidsi’s inventory form their main pulpit.
Lagging financial results:
Late filing of financial result never grabs our attention because we overlook them as there might be some internal issues. Whereas, a good stock trader always take it as a remarkable sore point and investigate to find for what reason the filing of financial report gone late.
The stock market is volatile and this volatility depends on innumerable factors. Therefore it’s always been suggested to never take such issues as for granted.
Always go with cash flow rather than with net income:
Whenever we are going to decide for a company we focus on their net income. We hardly focus on their cash flow. This cash flow always needed to be considered. if net income is high and their cash flow is crippling the company may have problems in raising their revenue from their customers.
A recent study shows that the flow of cash gets deteriorated showing a jump of 55.23% from 44.96% which is again a spectacular sore point.