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An index is a group of stocks selected to track a particular investment theme like a market, an asset class, a sector, an industry, or even a strategy. It's a tool used by investors, financial managers to describe the market & compare the return on specific investments.

The Sensex is the benchmark index of the BSE and comprises 30 of the largest and most actively-traded stocks, providing an accurate gauge of India's economy. It is used to observe the overall growth, development of particular industries, booms & busts of Indian economy.

Nifty is an equity benchmark index consisting of 50 actively traded stocks accounting for 12 sectors of the economy. It is used for a variety of purposes: benchmarking fund portfolios, index based derivatives and index funds.

Equity shares or ordinary shares represent the ownership of a company and capital raised by the issue of such shares is known as ownership capital or owner’s funds. Equity shares are the form of fractional or partial ownership, in which the shareholder takes the maximum business risk. The holders are paid on the basis of the earnings of the company and do not get a fixed dividend.

Blue chip stocks are shares of very large and well-recognised companies with a long history of sound financial performance. They are relatively less sensitive to market fluctuations than Mid Cap and Small Cap companies and generally cost high, as they have good reputation and are often market leaders.

High growth shares are stocks of a company that generate substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry.

Dividend is the amount of cash an investor receives; capital appreciation is change in stock price. It is the amount of dividend divided by current stock price. A good dividend yield is “the higher the better.” It varies with interest rates and general market conditions, but typically a yield of 4 to 6 per cent is considered quite good.

Equity Trading is the process of buying and selling of shares in the secondary market with a view to profit from the difference in the buying price and selling price of the share. Equity shares are issued and traded, either through exchanges or over-the-counter markets.

Intra-day trading is about buying and selling one’s holdings during the same trading day with the main objective being to make profits by taking the advantage of stock market movements. Intra-day trading involves the buy/sell orders being specified by the person who is involved in trading.

Delivery Trading is perceived to be one of the secured ways of trading in the stock market. If one buys shares today and sells them after one day, then that is called Delivery Trading. The main advantage of Delivery Trading is that, the Fear of Loss of Money is very less when compared with Intra-day Trading.

Margin trading is a facility under which one buys stocks that one can’t afford to. One is allowed to buy stocks by paying a marginal amount of the actual value. This margin is paid either in cash or in shares as security. Margin trading can be considered leveraging positions in the market either with cash or security by investors.

F&O is an abbreviation for Futures and Options. Futures and Options are derivatives products. F&Os are contracts between two people, which are not entered directly between them and occur through the stock exchange mechanism. This ensures that you are not bound to any individual to honor the contract.

Fundamental analysis of a stock is used to determine the health of a company. It’s recommended to do a proper fundamental analysis of the stock before investing if you are planning for long term investment. Fundamental Analysis (FA) is a holistic approach to study a business.

Technical analysis is a means of examining and predicting price movements in the financial markets, by using historical price charts and market statistics. It is based on the idea that if a trader can identify previous market patterns, they can form a fairly accurate prediction of future price trajectories.

Face value is the nominal value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. Face value in stock market is the dollar value of an issuer’s security. Face value, also referred to as par value, or par, is a representation of the value of a company’s common stock.

EBIT is acronym that stands for: ‘Earnings Before Interest and Tax’. It is the earnings of a business before interest and tax. It is therefore also referred to as ‘operating profit’. There are two different formulas for calculating EBIT: Revenue - Operating expenses or Net income + Interest + Tax.

Profit after tax or (PAT) is the net amount earned by a business after all taxation related expenses have been deducted. The profit after tax is often a better assessment of what a business is really earning and hence can use in its operations than its total revenues.

EPS is a measure of how much profit a company has generated. EPS is the portion of a company's profit that is allocated to each outstanding share of its common stock and is calculated by taking the difference between a company's net income and dividends paid for preferred stock and then dividing that figure by the average number of shares outstanding.

The market price is the current price at which an asset or service can be bought or sold. The economic theory contends that the market price converges at a point where the forces of supply and demand meet. 

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The Price-to-Earnings Ratio is also sometimes known as the price multiple or the earnings multiple.

P/E Ratio Formula & Calculations:

Market value per share
P/E Ratio =
Earnings per share

The PEG ratio is considered to be an indicator of a stock's true value, and similar to the P/E ratio, a lower PEG may indicate that a stock is undervalued. The PEG ratio enhances the P/E ratio by adding in expected earnings growth into the calculation.

Book value of equity per share (BVPS) is the ratio of equity available to common shareholders divided by the number of outstanding shares. This figure represents the minimum value of a company's equity and measures the book value of a firm on a per-share basis.

The Formula for BVPS Is

Total Equity – Preferred Equity
Total Shares Outstanding

The P/B ratio measures the market's valuation of a company relative to its book value. The market value of equity is typically higher than the book value of a company.

Market Price per Share
P/B Ratio =
Book Value per Share

The debt-to-equity (D/E) ratio compares a company’s total liabilities to its shareholder equity and can be used to evaluate how much leverage a company is using.

Debt Equity Ratio Formula and Calculation:

Total Liabilities
Debt Equity Ratio =
Total Shareholders’ Equity

The information needed for the D/E ratio is on a company's balance sheet. The balance sheet requires total shareholder equity to equal assets minus liabilities, which is a rearranged version of the balance sheet equation:
Assets = Liabilities + Shareholder Equity

The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The Interest coverage ratio is also called “times interest earned.” This ratio is used by creditors and prospective lenders to assess the risk of lending capital to a firm.

The Formula for the Interest Coverage Ratio:

Interest Coverage Ratio =
Interest Expense
EBIT = Earnings before interest and taxes

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. The current ratio is sometimes referred to as the “working capital” ratio and helps investors understand more about a company’s ability to cover its short-term debt with its current assets. Current liabilities include accounts payable, wages, taxes payable, and the current portion of long-term debt.

Formula and Calculations for Current Ratio:

Current Assets
Current Ratio =
Current Liabilities

Formula and Calculations for Current Ratio:

PEG Ratio =
EPS Growth
EPS = The earning per share.

The P/E ratio is calculated as the price per share of the company divided by the earnings per share (EPS), or price per share / EPS.

Dayco’s Youtube Videos

শেয়ারের গূঢ় রহস্যের সমাধানে দেবলোকে এবার হাজির একজন...। কে? কেন? আর কী বললেন? দেখুন তাহলে - কী অবস্থা।
শেয়ারে বিনিয়োগ কেন আর কীভাবে, বুঝেছে দেবলোক। এবার তাহলে পালা মনুষ্যলোকের। কী অবস্থা ?
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