Financial fundamentals

What is the Share Value?

The first measure of a share's value to you is what return you can expect in the way of annual dividends. Suppose you want to buy a share which you intend to sell in 3 years time. Then the share is worth the sum of the 3 year's dividends plus the value you can sell the share for at that time which you hope to be higher than the price at which you bought. This, people believe, is the capital growth.

Consider the position of the person buying the share from you. They intend to keep the share for, say, 10 years. If he calculates the value of the share in the same way that you did, then his starting point is the next 10 years' dividends. The capital growth that you got from him was actually his estimate of the dividend stream.

Henceforth, a share is worth the sum of future dividends over the long term not just the period that the person intends to hold the shares. If you think only in terms of the capital growth of shares it will surely catch you out.

Key ratios

1. Yield



Percentage of dividend over price.
Take note if a company has the profits and cash to maintain or increase the dividend.
When a yield suddenly goes very high, it may means that the share price has dropped significantly. That often means the market or investors are unsure whether the dividend will be maintained either now or in the future.



2. Price Earnings



Share price divide by Earnings per share.



3. Capital Gearing



Percentage of long term debts over shareholders funds plus long term debts.
Low gearing is less than 10%.
Medium gearing is about 33%.
High gearing is about 66%.



4. Income Gearing



Ratio as interest payable divided by earnings before interest and tax.
Indicates the company's ability to service its debt.
Low gearing is less than 25%.
Medium gearing is between 26% and 75%.
High gearing is above 75%.



5. Return on Capital Employed (RoCE)



Calculated as net profit before tax divided by long term capital.
Indicator of managerial performance.
Whether to invest in preference to earning interest in a safer saving scheme.
Low profitability 0 to 10%.
Medium profitability is between 10% and 20%.
High profitability is above 20%.



6. Pre-tax Profit Margin



Net profit before tax as a percentage of sales revenues.
Low margin is below 2%.
Medium margin is between 4% and 8%.
High margin is above 8%.
Highly dependent on the industry you are looking at. For example, what is a poor margin for technology companies could be a very good one for a bookshop.

Note: Extracted from book "Smart Finance" by Langdon, Ken and Bonham, Alan.

Human Domino

男生在何种情况下能打女生

男生只能在以下情况打女生

　　1.睡梦中转身打到.....没办法

　　2.伸懒腰时打到....不是故意的

　　3.打电动里的女生时.....为了破关

　　4.你打我我打你.....打情骂俏时

　　5.二个人激烈互打.....两小无猜

　　6.在路上踩到香蕉跌倒打到..都是香蕉惹的祸

男生只能在下面情况时让女生哭

　　1.故意拿洋葱给他切....恶作剧

　　2.生日送她999朵花时.....太感动

　　3.说笑话给他听时.....笑到流泪

　　4.帮她吹走眼中的沙子....为了救她

　　5.带她去看流星雨时....看的眼睛太酸

　　6.当她窝在你怀里让你安慰时....骗她说哭出来会比较好

男生打人的轻重

　　1.轻拍.....爱人

　　2.一巴掌过去....烂人

　　3.一个拳头过去.....败类

　　4.用踹的.....人渣

　　5.拿东西乱打.....禽兽

　　6.有致命的危险.....禽兽不如


无论如何....女孩子是不能打的....

Lesson learnt from The Richest Man in Babylon

George Samuel Clason began the first of the series of stories about thrift and financial success in 1926. The most famous being "The Richest Man in Babylon" and from it offers an understanding of the laws of money.

Rule 1:

A part of all you earned is yours to keep.
Keep aside 10% of your income as savings.

Rule 2:

Budget your expenses.
Do not over-spend. Live within your means, i.e. equal to or less than 90% of your income.

Rule 3:

Make your gold multiply.
Make your money work for you.

Rule 4:

Guard your treasures from loss.
Consult the wisdom of those who are competent through their experience in the profitable handling of money. Avoid unsafe investments and businesses which you are not familiar or which are not approved by those skilled. Always manage risks.

Rule 5:

Make your dwelling a profitable investment.
Own your own home. Reduce the cost of living.

Rule 6:

Insure a future income.
Make preparation for a suitable income in needs during old age. Provide protection for your family should you be no longer with them.

Rule 7:

Increase your ability to earn.
Learn to become more skillful and add value for yourself.

Rule 8:

Good luck waits to come to that man who accepts opportunity.
Procrastinate not, as man of action are favoured by Goddess of Good Luck.

Rule 9:

If you desire to help someone, do so in a way that will not bring someone's burdens upon yourself.

Rule 10

Work, some men hate it, make it their enemy. Better to treat it like a friend and make yourself like it.
Work, well done, does good to the man who does it. It makes him a better man.
Decide what you most desire to accomplish then work will aid you to achieve it.

Do You Think MPs Cant Dance?

Reasons to dance in joy:

Singapore scores highest employment rate in 15 years..

Our economy grows 7.1 percent in Q3Y2006..

Having highest percentage of high net worth individuals in Asia.

Seems like its job well done and good time to let their hair down. While many of us are back to labour dutifully keeping ourselves employ-able for further 15 years or so and hopefully achieving financial independence in the uncertain future.

Carry on baggage

IQ Test

Pre-school children were asked the following question:

"In which direction is the bus pictured below traveling?"


Look carefully at the picture.
Do you know the answer?
The only possible answers are "left" or "right".


ANSWER:

NOTE: Hold left button of mouse and move cursor downwards on the area below.

The pre-schoolers all answered " right".

When asked, "Why do you think the bus is traveling in the right direction?" they answered: "Because you can't see the door."

Coming Soon...