Four things to consider before buying a company’s shares

When you buy a company’s shares, you buy into that company. You buy into both their assets and liabilities.  It is therefore wise to properly consider and research into the company before you invest your hard earned money.

If it is a reputable company, you will find information about their activities online. Factors like the profitability of their business activities, the likelihood of growth and expansion and their stake holder relations history are points to consider.

You should also look through their annual reports and financial statements. The pivotal points listed below should guide your decision making:

  • Earnings: Consider the company’s earnings over a period of time. The number stated must always be higher than the previous year.
  • Sales: The number stated here must also be higher than previous years. If they have not made more sales, their profitability and growth are in question.
  • Debt: The number stated here must never be more than the stated assets. It must always be lower than the previous year as well.
  • Equity: This refers to the value of shares offered by a company. This figure must always be higher than the year before.

If the company you are interested in scales through this four-point test, it is safe to invest in them. Your investment is likely to yield satisfactorily. Sign in to ARM Stocktrade and place your trade order.

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Source: Blog

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