Few hacks to identify bad stocks⚠️

• Debt to equity ratio
• Interest coverage ratio
• CFO/PAT
• Promoter Pledging
• Market cap VS Enterprise value

Let’s discuss in detail! ⤵️

1⃣ Debt to Equity ratio

If a company has high debt then it means that the companies debt value is more than its asset value which is not a good sign.

✅ratio < 1 is considered ideal.

2⃣ Interest coverage ratio

This ratio tells us how efficiently the company is paying the interest charged on its debts.

✅ratio > 2 is considered ideal.

#investing #nifty50

3⃣CFO/PAT

If the CFO or cash flow statement is consistently positive every year then it's a good sign.

On the other hand, if the CFO is less than the PAT of the company then it can be a red flag.

✅ratio > 1 is considered ideal.

#Nifty

4⃣Promoter Pledging

A company requires funds for expansion. It can do it by pledging the promoter's stake.

✅value < 30% is considered ideal.

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