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Understanding Your Company

Learn how to monitor/study the performance of companies using financial statements and understand relevant time frames.

Gopal Kavalireddi
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Upon completion of the listing process, it is the responsibility of the company’s management to provide periodic updates regarding the financial and operational health of the company, in-line with the regulatory guidelines. These periodic financial updates are given in the form of financial statements like Profit and Loss, Balance Sheet, Cash Flow and the Shareholding Pattern of the company. In addition, the company publishes the Annual Report at the end of each financial year, summarizing the business activities of the company over the last financial year.

In addition to this information, the management of the company upon receipt has to immediately disclose any material information to the stock exchanges, that can affect the stock price as well as the company’s current and future prospects. Also, it is essential to read the investor presentation provided, for better understanding of the company. Management interviews in print and TV media, investor conference calls, brokerage reports aid in the visibility of the company’s current and future growth outlook.

The Financial Year (FY) in India is currently split into 4 quarters – Q1 refers to Apr-Jun, Q2 refers to Jul -Sep, Q3 refers to Oct-Dec and Q4 refers to Jan – Mar. Also for better understanding, Q1, Q2 are combined to form the H1 or the first half of the year and Q3, Q4 are combined to form H2 or the second half of the year.

When the businesses of the company are part of a single entity, then the unaudited financial results declared are termed as Standalone Unaudited Financial Results. In case, the company has subsidiaries, joint ventures or other entities which are contributing to the revenues and profits of the parent company, then the financial results declared are termed as Consolidated Unaudited Financial Results. It is important to consider the consolidated results wherever available, as they provide an aggregate perspective of the company’s business operations and financials.

At the end of each quarter, the company declares its unaudited financial results and shareholding pattern for the recently ended quarter, which provides detailed information. At the end of the financial year, the company provides the audited financial results for the full year, which helps in understanding the financial health and performance of the company from all aspects. In addition, an Annual General Meeting (AGM) is conducted to share the audited information to the shareholders, facilitate management interaction, and be participative in other business decisions of the company like an appointment of auditors and directors, new business initiatives etc.

Let us examine each of these declared statements and understand the importance of these financial and operational results in understanding the general health of the company

 

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Profit & Loss Statement

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A step-by-step break up of how to study P&L/Income statements starting from revenues all the way down to schedules & notes to the accounts.

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Responses

Samika commented on April 23rd, 2019 at 11:49 AM  
For how many days can shares be held in a trading account before they have to be sold?


tejas commented on April 23rd, 2019 at 5:08 PM  
There are no limits as such. You can sell shares anytime after you have purchased them.


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