How to view Budget

  1. Growth
  2. Development
  3. Inflation(Stability in Economy)
  4. Immediate Challenges

Based on how well the above things are promised and how feasible the solutions are for the above
we can rate the budget

The motive of Government Budget is to increase GDP.It is like when the whole economy goes up the GDP goes up. When the Cake that should be shared is large everyone gets a big piece out of it.When the economy grows, GDP grows and cash flow among people would grow.

In our GDP 2 out of 3 comes from Service sector and foreign clients contribute a huge part of it.

GDP can be measured like one below

GDP = C + I + G + (x-m)

G – Government Stimulus to promote economy Growth
X – Export
I – Private Investment
C – Consumption Expenditure(Affected due to demonetization at present)
m – Imports

As per the current Situation

  • There is No Major Government Stimulus
  • Import is more then Export.So x-m is Negative
  • Private Investment is Lethargic because of Trump
  • Consumption is low because of demonetization

Government Stimulus helps in Capital Expenditure. Capital Expenditure is the One Incurred by the Company during initial stages of establishment. Capital Expenditure are very less compared to Revenue Expenditure. Revenue Expenditure helps in daily process or functioning of company like purchase of raw materials to making it finished goods.

Difference Between Deficit, Revenue, Expenditure and Relationship

Earnings per Share (EPS)

EPS = Profit/Total no of Shares

More the EPS tells the company is running in Profit

Book Value of Share
Book Value

Book Value = Assets – Liabilities

(or)

Book Value = Total amount after selling Company Asset/Total no of Shares

Amount of money that a holder of a common share would get if a company were to liquidate

P/E Ratio

The following should be considered while doing P/E Ratio Analysis

For Value Investment

  1. P/E ratio should be low for Value share and should have been consistent in the past
  2. The Dividend Yield would be More
  3. The Cash Flow Statement would be consistent

Outstanding – Outstanding shares are shown on a company balance sheet as Capital Stock.A companys stock currently held by all its shareholders, share blocks by institutional investors and restricted shares owned by the company

Market capitalization is calculated by multiplying a company’s shares outstanding by the current market price of one share

outstanding shares is not static, may fluctuate. Outstanding shares will decrease if the company buys back its shares under a share repurchase program.outstanding shares will increase if it issues additional shares.

The number of shares outstanding will double if a company undertakes a 2-for-1 stock split, or will be halved if it undertakes a 1-for-2 share consolidation.

Institutional Investor
A organization that trades securities in large quantities that they are given preferential treatment and lower commissions. Institutional investors has fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

Asset Management Companies like Relianace Asset Management, HDFC Asset Management are some of Institutional Investor.