If you are investing in equities and are unaware of what is meant by return on capital employed, price earnings ratio or return on equity, The Conscious Investor (John Price; Wiley; Pages 366; $49.95) is for you. It dwells on understanding the essential valuation ratios, payback period and discounting cash-flow methods. This book provides the basic understanding of book-keeping and accountancy. For prudent investors, it is important to have reasonable understanding of these principles. The book also includes inputs from Warren Buffett. John Price begins with the importance of calculating the intrinsic value of a stock. An investor needs to compare the intrinsic value to the market prices before making any decision to buy or sell.
Financial ratios are important to get an idea of the current strength of a company and any favourable or unfavourable trends. RoE and RoCE are key ratios which give the indication of the ability of the management. In the same way, EPS (earnings per share) provides more insight into the performance of the company than NPM (net profit margin). The book highlights the fact that dividend discount models should be used with utmost care. Articles in Moneylife have also covered the importance of these essential ratios and the irrelevance of the dividend discount model. This book is ideal for budding investors. Though it may contain technicalities of US accounting practices, these can be easily adapted. But if you are not familiar with the basics of investing, the book may leave you utterly confused.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
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