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basant
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   Posted: 17/Apr/2007 at 6:51pm |
By establishing a cash tax rate or by calculating the actual cash operating taxes, we have removed from the equation all taxes that were paid on investment income and the tax shield that was provided by the interest expenses.
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Good point. Very interesting.
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Mr. V
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Posted: 17/Apr/2007 at 9:14am |
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I came across the item "reserves excluding revaluation reserves" in the financial statements of some companies like Blue Star.
Is this the same as Reserves ?
If yes, then if a company has significant Reserves, what does it mean in a qualitative sense ?
What are the most effective ways for the management to increase shareholder wealth using these reserves ?
Can it use the reserves to buy back shares?
Can it distribute the reserves by way of dividend payout ?
Can it deploy the reserves in a growth business to increase EPS ?
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basant
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Posted: 17/Apr/2007 at 9:36am |
The best of the three options is to increase EPS as long as the return on that business exceeds the cost of capital. Buying back shares or paying off the money as dividend theoritically have the same implications because in both the cases money is being returned back to the shareholders.
Nevertheless it is always better to buy out the shares because a buy out helps in later years (reduced equity) whereas a dividend payment is one time for one year.
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Mr. V
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Posted: 17/Apr/2007 at 9:48am |
Okay so if the company cannot effectively deploy the reserves in operating business then it should buy back shares. Right ?
High reserves will keep the ROE low until the time the management finds avenues to effectively deploy it. Right ?
Reserves/No. of shares = Cash per share Right ?
My apologies if the questions are too elemental for Teddies. I just want to reiterate and clear some basic fundaas once and for all 
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basant
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Posted: 17/Apr/2007 at 9:54am |
Reserves/No. of shares = Cash per share Right ? _______________________________________________________
Not quite because reserves could be deployed in fixed assets also but (Capital + Res)/No. of shares = Book value.
Cash per share is generally cash in hand + Bank + liquid marketable securities / No. of shares
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Mr. V
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Posted: 17/Apr/2007 at 10:17am |
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What are the typical examples of fixed assets ?
Is there any particular section in Quarterly results, P&L and Annual balance sheet that reports the Cash in hand, Bank & Liquid investments ?
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basant
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Posted: 17/Apr/2007 at 11:06am |
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Fixed assets = land building, machinery,vehicle etc. You get it in the balance sheet = >assets side
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kanagala
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Posted: 17/Apr/2007 at 11:37am |
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I have the following question,
Though ROE of the company is less, if the price is significantly less than the book value, this much be a good investment candidate. Compared to the company which has high ROE and high PE. Am i missing something here?
Is there any way to find out the cyclicality of the company by looking at the numbers without going into subjective analysis?
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