{"id":4690,"date":"2022-07-23T07:59:59","date_gmt":"2022-07-23T07:59:59","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=4690"},"modified":"2022-08-17T09:02:31","modified_gmt":"2022-08-17T09:02:31","slug":"shortlist-quality-companies","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/shortlist-quality-companies\/","title":{"rendered":"How to Short-list Companies Worth Investing?"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662e446ac14f8\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662e446ac14f8\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Direct_Equity_Investing\" title=\"Direct Equity Investing:\">Direct Equity Investing:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Top_10_aspects_to_look_for_in_a_Company\" title=\"Top 10 aspects to look for in a Company:\">Top 10 aspects to look for in a Company:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Growth_Oriented\" title=\"Growth Oriented\">Growth Oriented<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#MOAT\" title=\"MOAT\">MOAT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Free_Cash_Flow\" title=\"Free Cash Flow\">Free Cash Flow<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Valuation\" title=\"Valuation\">Valuation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Management\" title=\"Management\">Management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Past_Financials\" title=\"Past Financials\">Past Financials<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Operating_Efficiency\" title=\"Operating Efficiency\">Operating Efficiency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Debt\" title=\"Debt\">Debt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Return_to_Shareholders\" title=\"Return to Shareholders\">Return to Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Future_Prospects\" title=\"Future Prospects\">Future Prospects<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#FAQs\" title=\"FAQ&#8217;s:\">FAQ&#8217;s:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#For_more_Information_Check_this_Video\" title=\"For more Information, Check this Video:\">For more Information, Check this Video:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/shortlist-quality-companies\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Direct_Equity_Investing\"><\/span><strong>Direct Equity Investing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When an investor purchases shares of a company through the stock market, they are making a direct equity investment. Equity, then, refers to the cash invested in a corporation in the form of shares. To get voting control, the investor is essentially purchasing a stake in the company.<\/p>\n\n\n\n<p>The long-term returns of equity investments are superior to those of every other asset category. True. But how can you choose the best firm? Understanding a company&#8217;s operations, financial health, and future prospects is always time well spent.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><strong>In contrast, can you devote the time and energy necessary to learn about over 7,500 firms listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) before deciding on a single one to invest in?&nbsp;<\/strong><\/p>\n\n\n\n<p>For some alternative examples of numbers that might make you feel better: Companies in this index have a wide variety of market capitalizations and share prices. Where and how do you even begin?&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"MsKTj4us3b\"><a href=\"https:\/\/rakshithpai.com\/equity-fund-investing\/\">What is Equity Fund Investing? Features, Benefits, Drawbacks, &#038; Types Explained.<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;What is Equity Fund Investing? Features, Benefits, Drawbacks, &#038; Types Explained.&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/equity-fund-investing\/embed\/#?secret=VBjJ4Chysk#?secret=MsKTj4us3b\" data-secret=\"MsKTj4us3b\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Top_10_aspects_to_look_for_in_a_Company\"><\/span><strong>Top 10 aspects to look for in a Company:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Growth_Oriented\"><\/span><strong>Growth Oriented<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>A growth-oriented company is one that already exists but has the potential to make a lot more money from one or more of its industries. <\/strong>This means that the company will need more people with specialized training and high salaries, and expansion plans of land &amp; machinery. Basically, overall growth in business.<\/p>\n\n\n\n<p>That which enhances a business&#8217;s success rate. One way to expand a company is to increase its revenue (through more goods and services revenues), while another is to increase its profitability (through lower operating expenses).<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MOAT\"><\/span><strong>MOAT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The term &#8220;moat&#8221; is used to describe how well a company is expected to be able to protect itself from the competition and keep making money in the future.<\/strong> A company&#8217;s moat is the distinct advantage it enjoys over its rivals.<\/p>\n\n\n\n<p>For example, <a href=\"https:\/\/rakshithpai.com\/itc-worth-investing\/\">ITC<\/a> Cigarettes and its brand loyalty. Regular smokers tend to stick with one particular brand of cigarette. A company&#8217;s &#8220;moat&#8221; is its ability to keep making money over time, and the best way to do that is to keep customers coming back.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"f1t6FIVFED\"><a href=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/\">Find &#038; Invest in Companies With Strong MOAT!<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Find &#038; Invest in Companies With Strong MOAT!&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/find-and-invest-stocks-with-moat\/embed\/#?secret=MNbtlyCKrA#?secret=f1t6FIVFED\" data-secret=\"f1t6FIVFED\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Free_Cash_Flow\"><\/span><strong>Free Cash Flow<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The term &#8220;free cash flow&#8221; (FCF) refers to a company&#8217;s net cash inflows that are not needed for working capital or capital expenditures. <\/strong>Free cash flow is a way to measure how profitable a business is. It includes investments in equipment and assets as well as changes in working capital on the balance sheet, but it leaves out non-cash expenses on the income statement.<\/p>\n\n\n\n<p>In simple terms, FCF is termed as a free cash flow to the firm and is the surplus of operating cash flow over working capital requirements and capital expenditures.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Valuation\"><\/span><strong>Valuation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>A valuation is a mathematical method for estimating the true worth of a company or an item. Businesses can be valued either on their own or in relation to other businesses or assets that are similar.<\/strong><\/p>\n\n\n\n<p>Investable securities are identified through valuation exercises in which their intrinsic worth is determined and then compared to their current market price.<\/p>\n\n\n\n<p>In investing, we say a company is valued high when it is overvalued and low when it is undervalued.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Management\"><\/span><strong>Management<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Management refers to the process of running any kind of organization, whether for profit or not. Management is the practice of organizing a company&#8217;s resources effectively.<\/strong><\/p>\n\n\n\n<p>It is the manner in which something is handled, the skill with which something is supervised, or the people in charge of an organization. Personal financial planning is an example of management in action. Having ethical management in the company you have invested is extremely important.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Past_Financials\"><\/span><strong>Past Financials<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The purpose of financial statements is to report on the economic operations and results of a company in writing. <\/strong>The government, accounting firms, investors, and lenders all rely on audited financial records to make informed decisions.<\/p>\n\n\n\n<p>As an investor intending to invest in a company, you are supposed to be aware of the past happenings of the company. Thus, reading at least the past 3 to 5 years of the company&#8217;s financials is crucial.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-1024x680.jpg\" alt=\"companies past financials to understand the business growth\" class=\"wp-image-4694\" width=\"1181\" height=\"784\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-1024x680.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-300x199.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-768x510.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-1536x1020.jpg 1536w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs-150x100.jpg 150w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/gcsnospexfs.jpg 1600w\" sizes=\"(max-width: 1181px) 100vw, 1181px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operating_Efficiency\"><\/span><strong>Operating Efficiency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Operating Efficiency is a metric for resource allocation in a commercial setting. <strong>Operational efficiency is the ratio of a process&#8217;s output to the inputs it requires to run smoothly. The ratio of output to input will rise as operational efficiency rises.<\/strong><\/p>\n\n\n\n<p>So, operational efficiency is an organization&#8217;s capacity to produce a high-quality service or product while minimizing the time, effort, and resources wasted in doing so.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Debt\"><\/span><strong>Debt<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One&#8217;s debt level indicates the amount of money they owe to another person or organization. Many businesses and people rely on debt to finance costly investments. In a debt arrangement, one person gives money to another person on the condition that the money will be paid back in the future, usually with interest.<\/p>\n\n\n\n<p><strong>Hence, debt is an obligation to repay a sum of money, while financing is the provision of money for use in economic activity.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Return_to_Shareholders\"><\/span><strong>Return to Shareholders<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A company&#8217;s profitability can be evaluated by looking at its return on equity. ROE can alternatively be viewed as a return on assets minus liabilities since a shareholder&#8217;s equity is determined by adding up all assets and removing all liabilities.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>Net income is used to calculate ROE, which is the ratio of a company&#8217;s profitability to the money its shareholders have invested in the business.&nbsp;<\/p>\n\n\n\n<p>So basically, <strong>the return on equity measures how profitable a company is and how effectively it makes money. Return on equity measures how efficiently a business turns stock funding into earnings.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"t8zMnBCGdD\"><a href=\"https:\/\/rakshithpai.com\/high-roe-stocks-in-india\/\">High ROE Stocks in India &#8211; 2022<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;High ROE Stocks in India &#8211; 2022&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/high-roe-stocks-in-india\/embed\/#?secret=zwhM7PInpC#?secret=t8zMnBCGdD\" data-secret=\"t8zMnBCGdD\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Future_Prospects\"><\/span><strong>Future Prospects<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A company&#8217;s future prospects in the market are determined by its expected performance in the face of intense competition. A company&#8217;s market prospects are its expected level of competitiveness in a certain market.<\/p>\n\n\n\n<p><strong>If a company&#8217;s revenue is increasing on an annual basis and its fixed expenses, including labor costs, are consistent or decreasing, the outlook is generally positive. Evaluate the firm&#8217;s debt levels and its ability to get funds.<\/strong><\/p>\n\n\n\n<p>So, future prospects can be anything and everything about the company that tells us where it is heading.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Investment is the use of a resource with the expectation that its value will rise over time. In order to make an investment, one must first give up something of immediate value. When you buy something on the financial market, the goal is to make money from it. But only after careful consideration.<\/p>\n\n\n\n<p><strong>In this article, we have mentioned 10 such aspects that need to be considered before investing in a company.&nbsp;<\/strong><\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQ&#8217;s:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-fe711a62 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\"><div class=\"uagb-faq__wrap uagb-buttons-layout-wrap\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-151227a1\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>How do I shortlist a stock in India?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>There are many stock screeners with the help of which you can shortlist a company based on certain financial &amp; technical metrics. <strong>&#8220;Screener. In&#8221;<\/strong> &amp; <strong>&#8220;Google Finance&#8221;<\/strong> is one such stock screener that I would recommend. <strong><a href=\"https:\/\/rakshithpai.com\/best-stock-screeners-indian-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">CLICK HERE!<\/a><\/strong> to know more.<\/p><\/span><\/div><\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-48bac2f4\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is a good quality stock?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>A quality company is one with a low debt to equity ratio, which is indicative of a solid business. The ratio of net debt to equity is calculated by subtracting total liabilities from total shareholder equity on the balance sheet. Equities with the ideal debt-to-equity ratio generate greater returns for investors.<\/p><\/span><\/div><\/div><\/div><\/div>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-b881bb2d uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\"><div class=\"uagb-faq__wrap uagb-buttons-layout-wrap\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-72a527cb\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>How do you Analyse a company?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>In order to analyze a company, one must first understand its business economics. Understand how the company makes money and then see what can be done better in order to overcome competition and become a market leader. <\/p><\/span><\/div><\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-b5953cb4\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>How do you judge a stock performance?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>We judge a company by its financial aspects, stock performance is just a reaction to it. We use Ratio analysis to determine the company&#8217;s performance. Rations such as Price to book (P\/B), price to earnings (P\/E), P\/E growth, EPS, and <a href=\"https:\/\/rakshithpai.com\/best-dividend-paying-stocks-in-india\/\">dividend<\/a> yield are all common ratios used in stock analysis.<\/p><\/span><\/div><\/div><\/div><\/div>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_more_Information_Check_this_Video\"><\/span><strong>For more Information, Check this Video:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"How to Value a Company? Part 1\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/ZOVH7rhPyZM?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><b>Disclaimer<\/b>: All the information on this website is published in good faith and for general information purposes only.   <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/best-blue-chip-companies\/\" target=\"_blank\" rel=\"noreferrer noopener\">15 Best Blue Chip Companies in India &#8211; 2022<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/best-highest-paying-jobs-in-india\/\" target=\"_blank\" rel=\"noreferrer noopener\">15 Highest Paying Jobs in India &#8211; 2022<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/equity-fund-vs-debt-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Equity Fund or Debt Mutual Fund &#8211; Which one&#8217;s better?<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/common-stock-market-scams\/\" target=\"_blank\" rel=\"noreferrer noopener\">Five (5) Most Common Scams in Stock Market:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/debt-financing-importance\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Debt Financing? Features, Advantages &amp; Disadvantages:<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Direct Equity Investing: When an investor purchases shares of a company through the stock market, they are making a direct equity investment. Equity, then, refers to the cash invested in a corporation in the form of shares. To get voting control, the investor is essentially purchasing a stake in the company. The long-term returns of [&hellip;]<\/p>\n<div class='heateor_sss_sharing_container heateor_sss_vertical_sharing heateor_sss_bottom_sharing' style='width:44px;right: -10px;top: 100px;background-color: Dark Blue' data-heateor-sss-href='https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/4690'><div class=\"heateor_sss_sharing_ul\"><a aria-label=\"Facebook\" class=\"heateor_sss_facebook\" href=\"https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F4690\" title=\"Facebook\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg\" style=\"background-color:#0765FE;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 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