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Fundamental And Technical Analysis In Equity Valuation

Fundamental And Technical Analysis In Equity Valuation FUNDAMENTAL AND TECHNICAL ANALYSIS IN EQUITY VALUATION


INTRODUCTION

Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups and companies. As with most analysis, the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level, there might be an examination of supply and demand forces of the products. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock‘s fair value called intrinsic value. If fair value is not equal

to the current stock price, fundamental analysts believe that the stock…

Peer Group Analysis

Peer Group Analysis (Materials on this article was obtained from www.tutorialshero.com) Peer Group Analysis

It is the practice of comparing a firm's result to those of similar firms. Commercial industry classification systems often provide a starting point for constructing a peer group. Start with companies in the same industry, review the subject company and its competitors' annual reports, and confirm each comparable company's primary business activity is similar to that of the subject company.

Useful questions to ask are:

·    What proportion of revenue and operating profit is derived from business activities similar to those of the subject company?

·    Does a potential peer company face a demand environment similar to that of the subject company?

·    Does a potential company have a finance subsidiary?


Principles of strategic analysis A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Po…

Industry Classification Systems

Industry Classification Systems INDUSTRY CLASSIFICATION SYSTEMS

Commercial industry classification systems include:


1.    The Global Industry Classification Standard (GICS)

It is an industry taxonomy for use by the global financial community. It is used as a

basis for S&P and MSCI financial market indexes in which each company is assigned to a sub-industry, and to a corresponding industry, industry group and sector, according to the definition of its principal business activity.

2. The Russell Global Sectors classification system

It uses a three-tier structure to classify global companies based on the products or services a company offers.

3. The Industry Classification Benchmark (ICB)

It categorizes individual companies into subsectors based primarily on a company's source of revenue or where it constitutes the majority of revenue.


Various governmental agencies use a number of classification systems to facilitate the comparison of data over time and among countries tha…

Uses Of Industry Analysis

Uses Of Industry Analysis USES OF INDUSTRY ANALYSIS

Company analysis and industry analysis are closely interrelated. Company and industry analysis together can provide insight into sources of industry revenue growth and competitors' market shares and thus the future of an individual company's top-line growth and bottom-lin profitability.

Industry analysis is useful for:

·    Understanding a company's business and business environment
·    Identifying active equity investment opportunities.
·    Formulating an industry or sector rotation strategy.
·    Portfolio performance attribution.
There are three main approaches to classifying companies:

1. Products and/or service supplied.

This is the main approach to industry classification. Companies are categorized based on the products and/or services they offer. The term sector is used to refer to a group of related industries.

2. Business-cycle sensitivities.


A cyclical industry is sensitive to business cycles. Its revenues…

Porter's 5 Forces Analysis

Porter's 5 Forces Analysis INDUSTRY AND COMPANY ANALYSIS

Introduction

Industry analysis is a type of investment research that begins by focusing on the status of an industry or an industrial sector.

Why is this important? Each industry is different, and using one cookie-cutter approach to analysis is sure to create problems. Imagine, for example, comparing the P/E ratio of a tech company to that of a utility. Because you are, in effect, comparing apples to oranges, the analysis is next to useless.

In each section we'll take an in-depth look at the different valuation techniques and buzz words used in a particular industry, complete a 5-forces analysis on the state of the market and point you in the direction of industry-specific resources.

Porter's 5 Forces Analysis

If you are not familiar with the five competitive forces model, here is a brief background on who developed it, and why it is useful.

The model originated from Michael E. Porter's 1980 boo…

Approaches And Techniques In Contract Negotiation

Approaches And Techniques In Contract Negotiation APPROACHES TO NEGOTIATION:
There are four different approaches to negotiation and the outcome of the negotiation depends on the approach. The various approaches to negotiation are as follows:
WIN- WIN INTEGRATIVE APPROACH
This negotiation approach is also called as collaborative or creating value approach. It is superior to all negotiation approaches. It results in both the parties feeling that they are achieving what they wanted. It results in satisfaction to both the parties. It has the following characteristics.
There are a sufficient amount of resources to be divided and both sides can ‘win’The dominant concern here is to maximize joint outcomes.The dominant strategies include cooperation, sharing information, and mutual problem-solving. This type is also called ‘creating value’ since the goal here is to have both sides leave the negotiating feeling they had greater value than before. Since the integrative approach …

Reasons for Negotiating

Objectives of Negotiation Objectives of Negotiation in procurement & supply chain mgt
Several objectives are common to all procurement or sales negotiations:
To obtain the quality specifiedTo obtain a fair and reasonable priceTo get the supplier to perform the contract on time.To exert some control over the manner in which the contract is performedTo persuade the supplier to give maximum cooperation to the purchasing company.To develop a sound and continuing relationship with competent suppliers.To create a long-term relationship with a highly qualified supplier.ADVANTAGES OF NEGOTIATION
The advantages of negotiation are that it limits the number of players to those involved in the dispute. This allows for a focused approach to problem solving.Arbitration allows a third party to resolve disputes between two or more parties. The advantage of this system is that it allows a neutral party to decide on a resolution to the matter presented which is binding upon all parties.M…

What is Contract Negotiation

Contract Negotiation DEFINITION OF THE TERMS USED IN CONTRACT NEGOTIATIONS
contract negotiation
This is an action of two (or more) parties consulting about a possible arrangement of partnership. Their goal is to make an agreement that will be advantageous for all parties involved. Talks may go on between the parties till they come to a mutual agreement about all points. The final aim is an agreement which is impartial and fair to all parties.
Negotiated contract
Contract awarded on the basis of a direct agreement with a contractor, without going through the competitive bidding process. It is also called negotiated agreement.
WHY PARTIES CHOOSE TO NEGOTIATE
The list of reasons for choosing to negotiate is long. Some of the most common reasons are to:
Gain recognition of either issues or parties;Test the strength of other parties;Obtain information about issues, interests and positions of other parties;Educate all sides about a particular view of an issue or concern;Ventila…

How to Terminate a Contracts

Termination Of Contracts CIRCUMSTANCES UNDER WHICH CONTRACTS MAY BE TERMINATED
A contract is said to be discharged (or terminated) when the parties to it are freed from their mutual obligations. In other words, when the rights and obligations arising out of a contract are distinguished, the contract is said to be discharged or terminated. A contract may discharge in any of the following ways:-
Discharge by performanceDischarge by Previous AgreementDischarge by BreachDischarge by FrustrationMispresentationDischarge by Operation of LawDISCHARGE BY PERFORMANCE
When a contract is duly performed by both the parties, the contract comes to happy ending and nothing more remains. The contract, such a case, is discharged or terminated by due performance. But if one party performs his promise, he alone is discharged. Such a party gets a right of action against the other party who is guilty of breach.
Performance of a contract is the principal and most usual mode of discharge of …

Types Of Contractual Agreements 2

Types Of Contractual Agreements 2 CALLOFF ORDER
A Call‐off Order is an order created to cover multiple supplies or deliveries from a single company. A Call‐off order may be applied in the following circumstances:
For a medium / long / regular term supply of the same services from the same supplierFor regular, multiple deliveries to a range of dispersed sitesAn unknown future delivery schedule 4. Where precise volumes or values are not known until after deliveryWhere delivery and packing charges or supplier discounts, regularly affect final pricesA different legal contract exists with the supplier and the order is raised internally for control purposes onlyWhere there is a proven need to reduce document processing (reduce quantity of invoices through consolidated billing etc) An order of this type can only be placed after the appropriate procurement requirements have been satisfied.
Typical applications
Typically a Call‐off order could relate to the following categories of su…

Types Of Contractual Agreements

Types Of Contractual Agreements BLANKET PURCHASE ORDER
A blanket order is a purchase order the customer makes with its supplier which contains multiple delivery dates over a period of time, often negotiated to take advantage of predetermined pricing. It is normally used when there is a recurring need for expendable goods. Blanket orders are often used when a customer buys large quantities and has obtained special discounts. Based on the blanket order sales orders (release orders) and invoice items can be created as needed until the contract is fulfilled.
Having a blanket order prevents the customer from having to hold greater than necessary amounts of stock and avoids the administrative expense of processing frequent purchase orders, while favoring discount pricing through volume commitments or price breaks.
A blanket order is set at a fixed priced contract for a period of time. The buyer looks for the best pricing among competing supplier bids. After the best on…

The Express And Implied Terms That Relate To Contracts

The Express And Implied Terms That Relate To Contracts Terms of a contract may be Express or Implied.
EXPRESS TERMS
These are the oral and written terms agreed upon by the parties. Written terms prevail over oral terms. If contractual terms are written, oral evidence is generally not admissible to vary or explain
the written terms.
However, such evidence is admissible to prove that:
The contract was subject to a particular trade usage or custom.The parties had not incorporated all the terms into the document.The parties had agreed to suspend the agreement until some event occurred If handwritten, printed and typed terms contradict, the handwritten terms prevail as they are a better manifestation of the parties’ intentions. It was so held in Glynn v. Margetson.
IMPLIED TERMS
These are terms which though not agreed to by the parties, are an integral part of the contract.
Theses terms may be implied by statutes or by a court of law.
Terms implied By Statutes Certain statut…

Elements Of A Valid Commercial Agreement

Essential Elements Of A Valid Commercial Agreement The essential elements of valid contract as follows:

1.    Offer and acceptance- There must be a ‘lawful offer’ and a ‘lawful acceptance’ of the offer, thus resulting in an agreement. The adjective ‘lawful’ implies that the offer and acceptance must satisfy the requirements of the Contract Act in relation thereto.

2.    Intention to create legal relation-There must be an intention among the parties that the agreement should be attached by legal consequences and create legal obligations. Agreements of social or domestic nature do not contemplate legal relations, and as they do not give rise to a contract e.g. an agreement to dine at a friend’s house or a promise to buy a gift for wife are not contracts because these do not create legal relationship.

In commercial agreements an intention to create legal relations is presumed. Thus, an agreement to buy and sell goods intends to create legal relationship is a contract pro…

What is succession

What is succession planning What is succession planning

While the term executive director is used throughout this discussion it is understood it is only one of many terms (such as president & CEO, senior manager and general manager) used by organizations in the sector to refer to their most senior staff person. The same is true of terms used for other positions so that an accountant in one organization may be a financial officer or CFO in another. The important consideration is not the title but the work-related responsibilities and their value within the organization.

A succession plan, simply put, is a component of good HR planning and management. Succession planning acknowledges that staff will not be with an organization indefinitely and it provides a plan and process for addressing the changes that will occur when they leave. Most succession planning focuses on the most senior manager - the executive director, however, all key positions should be included in…

Barriers of Communication

Types of Communication and Their Barriers Type of Communication

a. On the basis of relationship
Ø    Formal

Ø    Informal

b.    On the basis of flow direction

Ø Downwards Ø Upwards Ø Sideways

c. On the basis of methods

Ø Oral Ø Written Ø Gestural

Communication Barriers

1.    Mechanical
Ø    Distortion (noise)

Ø    Filtering due to distance

Ø    Overloading

Ø    Inadequacy of facilities

Ø    Inadequate policies, rules and procedures (long channels etc.)

Ø    Status patterns (ranks, levels)

Ø    Lack of attention

Ø    Hasty conclusions

Ø    Lack of confidence on the communicator

Ø    Improper state of mind

Principles of effective Communication

·    Clarity

·    Adequacy

·    Right timing

·    Integrity

·    Participation

·    Strategic use of grapevine

·    Two way communication

·    Economy

·    Appropriate channel
·    Flexibility

·    Attention

a)    Writen communication

b)    Oral communication

c)    Grapevine

Creadits:this article was obtained from http://www.tutorialshero.com/tutorials/human-resource-manage…

WHAT IS A NEED

WHAT IS A NEED - what creates the need? - Schein’s classification of needs Schein propounded a classification of managers’ assumption about people based on a review of earlier approaches of motivation. His classification follows a broadly chronological pattern as follows:

Rational- Economic

Human motivation has its roots from the need for self interest and the maximization of gains as the prime motivations. According to Schein, this view places human beings into two categories:
1.    The untrustworthy, money- motivated, calculative masses

2.    The trustworthy, more broadly motivated, moral elite whose task is to organizes and control the masses

Social model

Views people as predominantly motivated by social needs – the need for personal relationship. This is drawn heavily on the conclusions of Hawthorne studies. The implications for managers is that emphasis on attending to peoples needs over the task will lead to greater productivity as well as higher morale.

Self actualization …

what is Motivation

Meanining Of Motivation MOTIVATION PROCESS& THEORIES

MEANINING OF MOTIVATION

Some words whch go with motivation:

·    Desire

·    want, wishes

·    aims, goal

·    needs and drives

·    motives, incetives


Motivation is a term used to describe those processes both institictive and rational, by which people seek to satisfy their basic drives, perceived needs and personal goals which triggers human behaviour

Therefore motivations is a process and a drive

Motivation may be defined as keeness for a particular behaviour or simply willingness to work in order to achive a predetermined reward or goal.


Motivation is a product of needs, drives or motives, which is basically the driving force within a person.

It is inner state that enersises, activates or directs behavior towards achieving a goal

Motivation is a process that starts with physiclogical or psychogical deficiency or need that activates a behaviour or a drive that is aimed at a goal or an incentive

Therefore motivation lies in t…

Kinds of Training-External training or off-the-job training

Kinds of Training-External training or off-the-job training 2.    External training or off-the-job training.

On the job training methods includes:

a.    Lectures

These are formally organized talks by an instructor on specific topics. This method is useful when philosophy, concepts, theories and problem solving have to be discussed. The lecture can be used for very large group to be trained in a very short time. These are when technical or special information of a complex nature is to be imparted the lecture are supplemented with discussion, case study, films and role playing.

b.    Case studies

In this case account of a real, or fictional, situation is given, and the trainees are asked to suggest answer to a number of practical and theoretical issues raised by the account. The method is useful for giving participants an opportunity to experience problem solving in a relevant context

Creadits:this article was obtained fromhttp://www.tutorialshero.com/tutorials/human-resour…

Kinds of Training-Internal or on-the-job training

Kinds of Training-Internal or on-the-job training Kinds of Training

1.    Internal or on-the-job training

a.    Demonstration

Here the trainer describes and demonstrates how to do a certain work. He performs the activity himself, going through a step by step explanation of the why, how and what of what he is doing. Demonstrations are often used with the combination with the lectures, pictures, text material, discussion, etc. the emphasis on this method is on know-how. The principle and the theory of a job must be thought by some other methods.
b.    Apprenticeship training.

A major part of training time is spent on the job productive work. Each apprentice is give a program of assignments according to a predetermined schedule which provides for efficient training for the trade skills. This method is appropriate for the training of crafts, trades and technical areas, especially when proficiency in a job is as a result of craftsman, a machinist, a printer, a tool maker, a p…

Identification Of Training Needs

Identification Of Training Needs IDENTIFICATION OF TRAINING NEEDS

Training is a means to increase the effectiveness of employees both managers and workers, in their present jobs and to prepare them for promotion to positions with greater responsibility. It should therefore be related to the needs of the organization and that of the employee concerned.

How you analyze training needs depends on whether you are training new or current employees. The main tasks is analyzing new employees’ is to determine what the job entails and to beak it down into subtasks, each of which you then teach to the new employees. According to McGhee and Thayer, the following three step approaches may be adopted to identify the training needs of any organization

1.    Organization analysis

Every organization exists to accomplish certain goals. These are expressed in the organizations mission statement. Therefore the management should ask themselves what the organizations goals are and how well …

Employee Training

Employee Training EMPLOYEE TRAINING

Training is the process of increasing the knowledge and skills of an employee for doing particular jobs. It is an organized activity designed to create a change in the thinking and behavior of people and to enable them to do their jobs in a more efficient manner.

The purpose of training is to enable the employees to get acquainted with their present or prospective jobs and also increase their knowledge and skills. Training makes new employees more productive and efficient

NEED OF TRAINING

1.    Non-availability of trained personnel

2.    Suitability for enterprise needs

3.    Proficiency in the latest technology

ADVANTAGES OF TRAINING

1.    Job satisfaction

2.    High output of quality goods

3.    Fewer accidents

4.    Low spoilage rate

5.    Reduction in number of complaints

6.    Mastery in new methods

7.    Better use of resources

8.    Introduction of latest methods

9.    Healthy interpersonal relations

10.    Management by exception

11.    Personal…

Job Analysis

Job Analysis JOB ANALYSIS

The purpose of this topic is to show you how to analyze a job and write job descriptions. We will see that analyzing jobs involves determining in details what the job entails and what kind of people the organization should hire for the job.

Basic Terminology

The simplest unit of work is the micromotion. A micromotion involves a very elementary movement such as reaching, grasping, positioning or releasing an object. An aggregation of two or more micromotions forms an element. An element is a complete entity such as picking up, transporting and positioning an item. A group of working elements makes up a work task. Related tasks comprise the duties of a job. Duties when combined with responsibilities (obligations to be performed) define a position. A group of positions that are identical with respect to their major tasks and responsibilities form a job. A job may be held by more than one person whereas a position cannot.

Job analysis defined

A j…

Properties of Sulphur(IV)oxide

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Properties of Sulphur(IV)oxide(Questions) (c)Properties of Sulphur(IV)oxide(Questions)
Write the equations for the reaction for the formation of sulphur (IV)oxide using: (i)Method 1
Cu(s)  + 2H2SO4(l)  ->  CuSO4(aq)  + SO2(g)  + 2H2O(l)
Zn(s)  + 2H2SO4(l)  ->  ZnSO4(aq)  + SO2(g)  + 2H2O(l)
Mg(s)  + 2H2SO4(l)  ->  MgSO4(aq)  + SO2(g)  + 2H2O(l)
Fe(s)  + 2H2SO4(l)  ->  FeSO4(aq)  + SO2(g)  + 2H2O(l)
Calcium ,Lead and Barium will form insoluble sulphate(VI)salts that will cover unreacted metals stopping further reaction thus producing very small amount/quantity of sulphur (IV)oxide gas.
(ii)Method 2
Na2SO3(aq) + HCl(aq) -> NaCl(aq ) + SO2(g)  + 2H2O(l)
K2SO3(aq) + HCl(aq) -> KCl(aq ) + SO2(g)  + 2H2O(l)
BaSO3(s) + 2HCl(aq) -> BaCl2(aq ) + SO2(g)  + H2O(l)
CaSO3(s) + 2HCl(aq) -> CaCl2(aq ) + SO2(g)  + H2O(l)
PbSO3(s) + 2HCl(aq) -> PbCl2(s ) + SO2(g)  + H2O(l)
Lead(II)chloride is soluble on heating thus reactants should be heated to prevent it…