How to view Budget
- Inflation(Stability in Economy)
- 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 = Assets – Liabilities
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
The following should be considered while doing P/E Ratio Analysis
For Value Investment
- P/E ratio should be low for Value share and should have been consistent in the past
- The Dividend Yield would be More
- 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.
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.