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CBSE - Class 12 Chemistry Amines Worksheet
A fundamentally strong company has the following must-have attributes (pick 2):
Has ambitious growth plans
b.Has consistent and growing revenues
c.Has no competition
d.Has been consistently profitable and the profits are increasing YoY/QoQ
Which of these is most important value of a company (from trader's standpoint)?
Face value
b.Book value
c.Market value
The company came out with great quarterly revenue earnings (with respect to last 2 qtr) however something doesn't look great. What is that?
Revenue is lower than that of the competitors
b.Revenue increased but profits didn't increase in the same proportion
c.Revenues are stagnating
Give the structures of A, B and C in the following reactions:
This an an Annual Statement of an Indian company. Looking at the first four rows of the "Expenditure" sector, what can be easily deduced?
The company is in power generation business
b.The company must be making physical products
c.The company has high employee cost but no raw material cost therefore it must be in "Services" sector
Which of these factors (among the 5 forces) do you think is biggest adversity for major Indian IT companies such as Infy and TCS?
Supplier power
b.Threat of new entrant
c.Competitive rivalry
d.Buyer power
Worksheet Answers
Solution:
Everyone has ambitions so that's not a sign of being fundamentally strong.
Having no competition just means that you have not been tested yet and any day a competitor arrives in the market, the perception about the first company can change very quickly.
Fundamentally strong companies have robust revenue and profit growth, along with a strong balance sheet. An example of fundamentally stong company would be Hindustan Unilever (as of 2018).
Checkout its P&L statement on MoneyControl:
https://www.moneycontrol.com/india/stockpricequote/personal-care/hindustanunilever/HU
Solution:
Face value is only useful in calculating dividends so it has no importance for traders. Book value is kinda important from valuations perspective but the most important valuation the trader is concerned with is what the market attributes to it.
Solution:
When revenues are going up but profitability isn't, it means that the company is facing margin pressures. A typical example would be TVS Motors. It has a steadily increasing revenue but its margins are always under pressure. The day they start improving their margins, the stock would move like a rocket.
Solution:
There are broadly two types of companies: Product based and Services based. A product based company typically makes physical products (anything that you can touch and feel) whereas a services based company provide sevice like banking or IT consulting. The above mentioned company had no raw material expense there it can not be a product based company.
The only exception to the above classification is software product based companies like Microsoft, Oracle etc., which are product based companies but their products can't be touched.
BTW, the company in question is TCS.
