What is Profit&Loss (P&L) Statement ?

Definition : Also known as Income statement, is a financial statement which shows expenses and revenue of a company during a particular period, usually a fiscal quarter or year.
Read : What Is Balance Sheet ?
Income Statement helps to convey the status of a company i.e. Company is making profit or suffering losses. It is very important to read Income Statement of a company before investing, both of recent and past years.
Note : Revenue : Total amount received from sales of goods and services. Expenses : Total amount spend in producing final product or service.
Structure of P&L Statement  Income Statement is divided into Five main section - Net sales, Cost of Goods Sold, Gross Margin, Operating Expenses and Net Profit Before & After Income Tax (Or Net Loss in case of Loss).
Net Sales : It is the sum of Gross sales excluding its returns, allowances and discounts.Cost Of Goods Sold : Amount of money used to produce the final product. For example cost of inventory, merchandise purchased…

Five Key To Success In Stock Market

Gaining wealth in stock market is not a easy job, it take lots of effort and time. Investment requires proper plan and deep research. And also investor need to have lots of patience to gain good returns. Most of the people mistakes investment as it requires lots of money to gain good return but, its a myth, Rakesh Jhunjhunwala is a great example, he started his investment with only ₹6000 and made billions with his intelligence. Investment does not require more cash, it requires more knowledge and research. In this article, i will tell you 5 key that can help you to convert yourself into a successful future investor.

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Long Term Vision : 

‘Plan before you start Investing’. Planning your portfolio is very helpful to clarify your investment motive. Every investor invest with same motive of earning money but there are slight differences. For example, some invest for short-term returns, some for very long term, some for their retirement and so on. Here we can see common motive is to earn profit but with different vision and plans. Most of the beginner’s attracts towards trading than investing as you can earn profit in very less time with trading as compared to investing. (If you don’t know difference between trading and investing, please hit the link given below). To become a intelligent investor, you should always invest with long-term vision i.e. Buy and Hold for minimum 3-5 years. Long-term investment minimizes the risk factor also able to generate good returns. Trading looks attractive but it is very risky, you will either earn good return or will lose your money. So if you are a beginner i will strictly suggest you to stay away from trading and focus on gaining knowledge. Investing requires deep fundamental analysis of a stock which means understanding the business and its fundamentals of the company before investing into it. Deeply analyzing the product, market, management, goals & vision, etc of the company is very important.

Conclusion : Always invest with long-term vision i.e. buy and hold shares for at least for more than 3-5 years. Very less risky and able to generate good returns sometimes more than expected. 

Research and Analysis : 

Long-term investment are very profitable but only if done with proper research and analysis of the company you are investing in. Analyzing the historical and present data of the company is a crucial part of investment. It helps to predict future performance of the business. You need to understand the business, accounting and fundamentals of the company. You need to go through various details of that company, for example product of the company, future demand of the product they are selling, future plans of the company, how much debt it holds, competitive advantage, and so on. You also need to study the company’s management like current CEO, CFO, CMO and other top position holders or board members, and also their efficiency to make the company profitable, also their reaction during market downturn, how they able to suffer losses, how people are responding towards their new products and decisions, etc are very important to understand.. There are also various other things that you need to analyse before investing. (Link given below will help you to understand fundamental analysis more deeply).

Conclusion : Understand the company before investing into it. Collect every possible data you can related to that company and then decide it is worthy to invest or not.

Patience :

 Planning and Analyzing is the initial part of investment, after that you need to sit back and wait for you effort to give you returns which is a big deal for most of investors especially beginners. It is more difficult as things do not work every time according to our plan. You always heard from many investors ‘Patience is the key of investment’, which is 120% true. They always mention patience because people think choosing a good stock is a difficult job but it is partly true the most difficult job is to wait. Wait for you investment to generate returns as human nature lacks patience. Before investing we already made plans in our mind that we will get this huge return or become a billionaire and all, but things do not work according to our plan. Sometimes stock takes more time than our expectation to generate return. So you need to believe in yourself and wait for the right time. Do not loose patience it can make you regret later.  Investment requires lots effort in planning, research and analysis but patience is the most important and key element of success.

Conclusion : Do not rush, keep calm and be patient. Invest with proper analysis and believe in yourself and you will able to make huge amount of money for yourself. Most of the  successful investors earned more than 80% of wealth after the age of 40. 

Keep Yourself Updated :

After putting your money into a stock, first thing you need to aware of is to keep yourself update at regular intervals. With update i meant regularly update yourself with changes occurs in the company and market. Also analyse rearrangement in the management, new policies by government, change in tax rates, market trends and so on. There are various resources available to keep yourself updated. You can Read newspapers (like economic times of India, Bloomberg, Business Times, etc.), watch news channels ( like CNBC, Bloomberg, TV5, etc.).you can also use Social media and google alerts. It is very important to keep yourself updated as any wrong decision taken by the company in future can be hazardous for your money.

Conclusion : Changes in the company, new government policies and market competition widely affects a business. So keep updated with the details in regular intervals because there is also possibility that wrong steps taken by the company can change its fundamentals entirely.

Learn From Failure And Follow The Success :

We always heard, ‘we need to learn from failure’, this is true it  surely helps you to understand what not to do. But following success helps us to learn what we need to do. Read biography of successful people and try to observe they key moves made by them. It will help you to learn how you can grab right opportunity at right time. Observe your surroundings and looks what is missing, what is people looking for which are not easily available, research on your idea and try to execute it before anyone else. There is always a opportunity for everyone we just need the right eye and trained brain to look and execute the opportunities. 

Check  Out : What Is Financing ?


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