Welspun India has been marred in a controversy over supply of fake Egyptian cotton to its US customers like Target and Walmart. Given this controversy, investors are running away from the company using adages such as 'there is never just one cockroach in the closet'. Investors using such adages as crutches without considering the monetary … Continue reading Putting numbers to the Welspun scandal
The Biggest Problem with Price-to-Sales Ratio
The problem of inconsistency and how it can lead to erroneous conclusions... Ratios (or multiples) are a popular tool that many analysts employ to identify cheap stocks. Similar ratios (such as a Price-to-Earnings, Price-to-Sales, etc.) are compared across firms and a company with a lower multiple is considered cheap relative to one that has a … Continue reading The Biggest Problem with Price-to-Sales Ratio
Demystifying Internal Rate of Return
And why firms use it as a measure of investment performance... Note: The concepts discussed in this article are meant for those who have studied finance at some point If you've studied finance at any point in your life, you would have come across the concept of Internal Rate of Return ("IRR") - the rate at which … Continue reading Demystifying Internal Rate of Return