Hunters of Dalal Street

1.        Recording revenue before completing material obligations under the contract 2.        Recording revenue far in excess of work completed on the contract 3.        Recording revenue before the buyer’s final acceptance of the product 4.        Recording revenue when the buyer’s payment remains uncertain or unnecessary 5.        Recording revenue from transactions that lack economic substance (In these transactions, the so-called customer is either under no obligation to keep or pay for the product, or no product or service was even transferred in the first place) 6.         Recording revenue from transactions that lack a reasonable arm’s length process (While recognizing that revenue on transactions that lack economic substance should never be considered legitimate, transactions that lack a reasona...

Risk Options: Before anyone searching for high return options, one should assess the risk appetite viz... The ability to take risk and the willingness to take risk Many financial advisors also take into consideration the major factors that determine the style of investment and the model of portfolio to be designed. The factors include the financial goals, financial stability, age, requirement of funds on emergency cases of the individual like, ex: A person needs to pay for his daughter’s education fee at the age of 21; his investment horizon is almost long Let us come back to the terms…ability to take risk and willingness to take risk, both seems the same meaning but not Willingness to take risk – Describes the emotions and attitude towards taking the risk, it could be high risk, medium risk and low risk Reaction to short term volatility of markets and at different stages like bull market, bear market- That demonstrates your willingness Ability to take risk –...

Methodology: 1. Rebuild the history and profile of the company. --------- Such as a. Differential analysis: What management said in one year vs what happened in the next year; things said in different statements b. Recent new releases c. Industrial or government data and statistics d. Pending litigations or cases against company e. Management profile : Background check analysis f. Competitors, suppliers, customers and products. 2. Financial Health ( I say sometimes numbers should speak every thing and not management)   a.  Capital Structure ( Debt-to-equity ratios) ---Composition of Debt and Equity b. Off Balance Sheet items Basically items stand outside the balance sheet ( In simple understanding )( Source: Companies Annual report ) and its impact. c. Credit Rating given by CLSA etc companies ( Here I refer reports of rating companies) d.  Cash Liquidity ( Infact most important factor I look into when company is facing problem at raising short term fun...