DINEO TSAMELA: How to figure out a good investment
Scrutinise the key financials before picking a company
When it comes to investing, many people tend to use a company's profit as a guide to whether they should put money into it. While profit is an important factor, the way financial reporting can be manipulated means it's not the most reliable number to base your decisions on. This means you need to look at an array of figures that might give you a clearer picture of the company's performance. Diving into financial results might leave you rather confused, but there are key figures you can look at to get a snapshot view of the company's performance. • Dividends: look at the company's dividend payout and frequency. Is it consistent? Has it gone up or down compared to the previous year's reporting period? • One-off costs: look out for them and understand their nature - are they initial investment costs or fines? If most of these one-off costs are fines, you might want to find out why they are a recurring problem for the company. It could be an indicator of corporate governance problems. •...
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