Quarterly Results
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So it is the time for quarterly statements from the listed companies. Frankly speaking I don’t think most of the companies would be interested in doing this exercise every quarter but they have to go by the rules or else stand the threat of getting de- listed.
When some major company (having more weight on the index) announces the date for their result then we can witness media frenzy. There are polls for forecasting the result; many fund managers make a tentative strategy, most of the times small retail investor join the market ‘hoopla’. When they announce the result it is usually a bunch of statistics and more so percentages. How easy it is to analyze within fifteen minutes the whole result and come out with prophetic statement like “this company is going to become IBM Global”, I don’t agree to it, for me percentages mean nothing. Percentages are there just to confuse us and many a times they are chosen just to create hype. Today two Indian companies announced their result, the headlines were company ABC records rise of 36% in profit and company XYZ records rise of 10%, so what does it mean? I read the figures in the detailed report and saw that ABC had given the figure Year on Year and XYZ on Quarter to Quarter basis. Even if they both were on same basis comparison is difficult, you have to see the base for understanding the absolute increase in profit or revenue or EPS or dividend.
I am sure everyone will later decipher the results but we should save our comments till we have finally understood the result and then decide our course of action. Last financial year there was an unique situation, a company announced the result and immediately the stocks dipped to a new low, later it was found that results were actually lot better, only thing the company had not presented in ‘market-friendly’ manner.
It was for this precise reason that Financial Accounting Standards Board (FASB) came out with Generally Accepted Accounting Principles (GAAP) so that investors find it easy to understand but again we have US GAAP, UK GAAP and also Indian GAAP. I don’t see anything wrong in any of these but please take time in coming out with sweeping statements.
So it is the time for quarterly statements from the listed companies. Frankly speaking I don’t think most of the companies would be interested in doing this exercise every quarter but they have to go by the rules or else stand the threat of getting de- listed.
When some major company (having more weight on the index) announces the date for their result then we can witness media frenzy. There are polls for forecasting the result; many fund managers make a tentative strategy, most of the times small retail investor join the market ‘hoopla’. When they announce the result it is usually a bunch of statistics and more so percentages. How easy it is to analyze within fifteen minutes the whole result and come out with prophetic statement like “this company is going to become IBM Global”, I don’t agree to it, for me percentages mean nothing. Percentages are there just to confuse us and many a times they are chosen just to create hype. Today two Indian companies announced their result, the headlines were company ABC records rise of 36% in profit and company XYZ records rise of 10%, so what does it mean? I read the figures in the detailed report and saw that ABC had given the figure Year on Year and XYZ on Quarter to Quarter basis. Even if they both were on same basis comparison is difficult, you have to see the base for understanding the absolute increase in profit or revenue or EPS or dividend.
I am sure everyone will later decipher the results but we should save our comments till we have finally understood the result and then decide our course of action. Last financial year there was an unique situation, a company announced the result and immediately the stocks dipped to a new low, later it was found that results were actually lot better, only thing the company had not presented in ‘market-friendly’ manner.
It was for this precise reason that Financial Accounting Standards Board (FASB) came out with Generally Accepted Accounting Principles (GAAP) so that investors find it easy to understand but again we have US GAAP, UK GAAP and also Indian GAAP. I don’t see anything wrong in any of these but please take time in coming out with sweeping statements.
posted by greensatya @ 4:46 PM
1 Comments:
At 3:01 AM,
Mona said…
Honestly ... everytime I saw the company results ... I am always confused and I can't help myself for not believing it. They always said that they make progress and they are one of the best from few companies ... hmmm sounds like I heard it from somewhere else too ;)
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