Stock market for beginers -4

Stock market for beginers -4 

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Equity -

equity is share holder's funds. Investors who invest in the company through share are called equity.


ROE -

 Return on equity This means how much return the company is giving to the shareholder on the equity. When you are researching a company, it is very important to see ROE. Because it tells us how much return the share holder got on equity. If we look at the roe of good companies in the past, the average is 16%. Which is very good. ROE does not include the company's debt. If the ROE of the company is very high, then the debt on that company is also the highest.

Equity share market


ROCE -. Return on capital employed. Roce consists of the company's debt. The formula is ROCE.
ROCE = EBIT / debt + equity

EBIT means. Earning before interest & taxes

This is the difference between roe and roce both roe does not include debt and roce includes debt. If you want to compare ROE and ROCE with another company, then you can do it from the company of the same sector.

EPS - EARNING PER SHARE. 


This means that the shareholder is making a profit of how many rupees behind a share, it is called EPS. EPS formula is
Profit / no. Of outstanding share

P / E RATIO - 
price to earning ratio.p / E ratio is high then it is known that stock is over valued, if p / e ratio is low then stock is under valued.

Let's understand from the example. Suppose the current price of a company's stock is 1000 rupees.
The stock made a profit of 100 rupees in 1 year
So P / E is RATIO- 1000/100 = 10 ratio.

CAGR - 

compound annual growth rate. CAGR tells you how much return he has given you in a year if you have made an investment.

Market order- 
When you buy a share at current price, it is called market order. Suppose you place a market order of 10 share 200 rupees of a company, then if that share becomes 208 in a few seconds then you will get a share for 208 rupees.

Limit order - 

When you place an order for a share in a limit, it is called limit order. Suppose the price of a share is 100 rupees, you put a limit of 90 or 95 on that order, then when that share goes to 90 or 95, then your order will be placed, it is called limit order. The advantage of limit order is that you get cheaper share, and you will not have to track the market again and again, when the share price goes to 90 or 95, the order will be automatically placed. It also has the disadvantage that many times the share does not go down, then your order will not be placed and it will be canceled.


Nifty p / E -

Nifty p.e is at least 10 and maximum is up to 30. You question is when do you have to invest? When the P / E ratio is between 10 and 15, you can invest as much money as you want because here you will get shares at a cheaper price which will give you good returns. When the market p / e is from 25 to 30, do not invest, here you will get expensive shares which will not give you good returns. In the meantime, you can invest a little money, which will give you the right returns.

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