Financial Ratios

[findleowong]

Dear all,

Usually from the company annual report, to calculate the ROE, the formula is net income/ shareholder equity. I’m looking at Singapore land limited annual report.


Should we be taking the (Equity holders of the company) from the profit & loss statement divide by the (Total equity – minority interest) from the balance sheet?

And to calculate the EPS, the formula is Net Income / Number of Outstanding shares.
Should we be taking the (Net profit) from the profit & loss statement divide by the Statistics of Shareholdings?

What’s the meaning of Earnings per share basic and diluted?

Thanks
Leo

[kelly wee]

Hi findleowong,

1. For ROE, I'm using net profit attributable to shareholders/equity attributable to sharesholders' funds b4 minority interest.

2. For EPS, I'm using net proift attributable to shareholders/no. of shares.

3. 'Dilution'is one of many words that describe stocks in the language of fluid dynamics. A stock with high trading volume is said to be 'liquid'. When a company goes public in an IPO, it 'floats' its shares. And, a company that drastically diluted its shares (with large amounts of convertible debt or mulitple offerings of common stock) was said to have''watered' its stock.

[findleowong]

Hi findleowong,

1. For ROE, I'm using net profit attributable to shareholders/equity attributable to sharesholders' funds b4 minority interest.

2. For EPS, I'm using net proift attributable to shareholders/no. of shares.

3. 'Dilution'is one of many words that describe stocks in the language of fluid dynamics. A stock with high trading volume is said to be 'liquid'. When a company goes public in an IPO, it 'floats' its shares. And, a company that drastically diluted its shares (with large amounts of convertible debt or mulitple offerings of common stock) was said to have''watered' its stock.

Hi Kelly,

thanks for your feedback & sharing.

Seems like the ROE & EPS as what you have mentioned earlier on is exactly what i'm asking.

At the same time, noted on the diluted meaning.

Cheers
Leo

[findleowong]

Does anyone know price/cash value in shareinvestor, what does it mean?

Thanks
Leo

[Dennis Ng]

Does anyone know price/cash value in shareinvestor, what does it mean?

Thanks
Leo

it means the stock price divided by Cash per share of the company.

[findleowong]

Does anyone know price/cash value in shareinvestor, what does it mean?

Thanks
Leo

it means the stock price divided by Cash per share of the company.

Dennis,

thanks for the reply. Where does this cash per share come from?

How to use this price/cash value? for valuation purpose?

Thanks
Leo

[Dennis Ng]

Does anyone know price/cash value in shareinvestor, what does it mean?

Thanks
Leo

it means the stock price divided by Cash per share of the company.

Dennis,

thanks for the reply. Where does this cash per share come from?

How to use this price/cash value? for valuation purpose?

Thanks
Leo

Cash Per share figure is derived from the Cash at Bank figure in the Balance Sheet of the company, divided by the number of issued shares the company has.

You should nett off any Bank borrowings to arrive at Net Cash per Share.

Personally, I would deduct the Net Cash Per Share from the share price before I compute the "revised" PE ratio, since I'm buying the business, not the Cash a business have....

And a Healthy business will continue to generate Cash and next year's Cash level would increase...

[findleowong]

Hi Dennis,

Thanks for your inner thought on it.

But, by looking at the price/cash value provided by Share investor, how should I relate it? I’m still confused over it whereas now I understand where this price/cash value derives from after you have spoken about it.

By looking at the price and cash value, how should we measure the stock price and the cash value?

Any example will be greatly appreciated.

Thanks
Leo

[Dennis Ng]

Hi Dennis,

Thanks for your inner thought on it.

But, by looking at the price/cash value provided by Share investor, how should I relate it? I’m still confused over it whereas now I understand where this price/cash value derives from after you have spoken about it.

By looking at the price and cash value, how should we measure the stock price and the cash value?

Any example will be greatly appreciated.

Thanks
Leo

As mentioned, I would deduct the Cash Per Share from the share price.

So this ratio provided by shareinvestor if price/cash is 3 times, it means the Cash per share is about 1/3 of Share Price....

Remember that Investing is More of an Art than a Science, if you want very Precise formula for Valuing a company, the answer is it only exists in Theory and people can do all the Discounted Cashflow Analysis they want, without considering that Business is volatile and you cannot project a company's Cashflows for the next 10 years with accuracy.

Curtis of www.WallStraits.com (he is a friend of mine) is one of these persons who made this fatal assumption of projecting 10 years into the future. Many of the stocks he selected "were bombed" out during the Global Financial Crisis in year 2008 and he dis-continued wallstraits.com thereafter.

On the other hand, beccos I sold off 80% of my stocks in year 2007, I managed to protect and realised my Capital Gains and becoming a Millionaire through the process and re-invested from Oct 2008....and now I'm another S$400,000 richer becos of practising "Market Cycle Investing"...

After investing for the last 17 years (first 5 years was hap hazard investing without knowing how to invest), I realise that many Theories shared in Stock Investing books out there do NOT work in the Singapore stock market at all.

What I share in my 2-day Secrets to Making Money in Stocks Seminar selects what really works in the Singapore Stock Market, after learning from my own mistakes, other people's mistakes, seminars, books and learning from my "sifus" who made millions in Stocks.

[findleowong]

I have only come across Curtis books & his portfolio seems pretty good beating the STI index. Doing quite well before the Global Financial Crisis!

Any idea, what is he doing now after he has discontinued Wallstraits.com?

[Dennis Ng]

I have only come across Curtis books & his portfolio seems pretty good beating the STI index. Doing quite well before the Global Financial Crisis!

Any idea, what is he doing now after he has discontinued Wallstraits.com?

I've most of his books too. His books are quite good for people who started to learn about investing.

However, he does NOT believe in Technical Analysis, which is partly the reason why he didn't get out of the stock market despite the market crashing and anyone using Technical Analysis would have gotten out of the market.

Not sure what is he doing now. He seems to have alot of his money invested into French Wine in the last 2 years. Had not kept in touch with him since then.

Well, the Real Test is the Global Financial Crisis. It is easy to make money in a Bull Market. Many investors gave back all their gains to the market during the Crisis. Many are still "underwater" (losing money) or slightly above water currently. (Most of the forumers active in wallstraits are NOT doing well on their investment. One guy is musicwhiz, he only has about 40% total returns to show for the last 5 years of investing. He is very active in sharing his "knowledge", which to me may be a bad thing becos anyone following him would probably get the miserable investment performance he achieved in the last 5 years. On the other hand, I more than quadrupled my money...

While on the other hand, as I sold off my stocks before the Crisis, I protected my gains and NOW I'm well in my 2nd round of making money....up another 40% since year 2009...having made over 300% in the year 2002 to year 2007.

7 years and total 340% returns....or over 23% Compounded Annual Returns.

[findleowong]

Hi Dennis,

once again, thanks for the detail sharing. That's also part of the reason, i'm in this forum to learn more to further enhance my knowledge.

[findleowong]

Hi Dennis,

This 40% since year 2009 is only from stocks? Or inclusive of other financial instruments?

The 300% over are there also from stocks?

[Dennis Ng]

Hi Dennis,

This 40% since year 2009 is only from stocks? Or inclusive of other financial instruments?

The 300% over are there also from stocks?

Additional 40% in year 2009 is the overall returns of my Investment portfolio.

Of the 300%, about 200% comes from Stocks, about 100% from Property.

What about your own investment portfolio and investment performance, mind to share?

[findleowong]

Dennis,

once again, thanks for sharing.

So far, i have only invested in stocks not in property yet. That's also the reason, i'm in this forum to learn from you and the rest of the members.



The 200% return from stocks comes from how many counters? Coz, it seems from your past posting, you are holding quite numbers of stocks in your stock portfolio?