1⃣ Gross profit ratio:
This ratio tells you what your business made after paying for the direct cost.
GPM of 50-70% is considered healthy & it would be for many types of businesses, like retailers, restaurants, manufacturers & other producers of goods.
2⃣ Operating profit margin:
OPM show how well the company’s operations contribute to profitability.
A higher operating margin indicates that the company is earning enough money from business operations to pay for all associated costs involved in maintaining the business.
Financial statement analysis is the one go-to analysis you should do before investing in any company.
It is used by shareholders as well as stakeholders to evaluate the business for better decision-making to understand the overall health of the company.
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It is the process of analysing and assessing:
1⃣Profit & Loss
2⃣Balance Sheet
3⃣Cash Flow Statement of the company.
• Equity Risk
• Credit Hazard
• Risk of Interest Rates
• Risk of Inflation
Let's discuss them in detail. ⤵
1️⃣Equity Risk
The money you put into an equity investment is eventually invested in the equities of publicly traded firms. Thus, equity SIP investment plan mutual funds, or any fund having a portion of its assets invested in stocks, are exposed to the hazards of stock markets.
2️⃣Credit Hazard
When a borrower or issuer takes out a loan, they commit to returning the principal and interest on the agreed-upon time. The absence of this creates a credit hazard.
PPF is one of the most popular investment cum saving schemes opted in India. It is a type of provident fund which is availed by self-employed individuals. PPF is a saving fund with many tax-saving benefits along with many promising returns.
When a PPF scheme is opened, the money gets deposited into the account every month & interest is compounding. This account can be ideal for people who have a low-risk appetite.