Archive for December, 2009
Investing – Financial Ratio
December 30th, 2009 | 
Author: To determine the viability of a company can be a lengthy and complex process. A quick way to narrow down the selection process would be to evaluate the financial strength of the company and the effectiveness of its management team.
Financial ratio consisting of current ratio, debt-equity ratio, price-earning ratio (PER) and return on equity (ROE) is one quick way to check the status of a company.
Current Ratio
Current Ratio is an indicator of the company’s debt-paying ability over the short term (12 months or less). It’s determined by dividing the current assets by the current liabilities. If the outcome is between 1 and 2.5, the company’s financial situation can be considered as healthy. Even tough, the higher the ratio, the more liquid the company, however, anything over 2.5 would indicate that the company may be keeping too much cash and may not be investing enough to provide future growth.
It’s probably also useful at this point to calculate the interest coverage ratio, which will indicate the company’s ability to service its debt. Interest coverage ratio is income before interest and tax divided by the interest expense. The greater coverage, the better it is.
Debt-To-Equity Ratio
Debt-To-Equity Ratio is an indicator of a company’s long term financial leverage. It compares the assets provided by the creditors with the assets provided by the shareholders of the company and is determined by dividing the long term debt by the shareholder’s equity.
The track record of the management team can be determined by using the following ratios:
Price-Earnings-Ratio (PER)
The Price-Earnings-Ratio is the relationship between the market price of the company’s shares and the earnings per share (EPS). This ratio tells you what you would be paying for each dollar of earnings. To work out the PER; divide the share price by the EPS. Generally, a high PER would means high projected earnings in the future. However the PER actually doesn’t tell us a whole lot by itself. It’s useful to compare the PER of companies in the same industry, or to the market in general, or against the company’s own historical PER.
As earnings tend to fluctuate from year to year, consider using the average earnings over the last six to ten years rather than for a particular year. It’s more valuable to look at the PER over time in order to determine the trend.
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Travel Insurance Can Be a Smart Financial Investment
No one ever expects to need travel insurance. Once you have taken the time to plan a dream vacation the last thought is of all of the life situations that could ruin it before it starts. Whether you are traveling alone, with your spouse, entire family, with business 
partners, or as part of a large church group, investing in travel insurance can guard against unforeseen circumstances.
What Is Travel Insurance?
Travel insurance is like most any other insurance plans. You pay beforehand to protect you in the event of something happening. Vacations can be very expensive. For some, it can take years of saving and planning to be able to take the perfect vacation. If you have already secured a flight, hotel, time off from work, arrangements for childcare and have set all other aspects of your vacation, you can not afford for anything to go wrong.
This kind of insurance can cover a wide variety of travel situations. Some commonly covered mishaps are trip or flight cancellations. If your flight is cancelled, a lot of money could be gone if your hotel does not hold your reservation because you are late. If your flight is not rescheduled do to inclement weather, your vacation can get completely spoilt. While travel insurance may not be able to change any of these situations, you will be financially reimbursed for the problems. Other situations covered by some plans are lost baggage. It can be quite expensive to replace your vacation supplies or wardrobe if the airline loses it. While they usually can get your luggage to you quickly, there is the chance it can be lost for good, making replacement of your things necessary. If your vacation involves special equipment, such as things needed for scuba diving or mountain climbing equipment, the expense might be too much for you to even try to replace while already at your vacation destination. Having travel insurance can help you afford to replace these items.
How To Get Travel Insurance
Getting insurance to stave off disaster is not a complicated process. It also is not that expensive considering all the typical plans will cover. Some cover events or situations you may never have taken into consideration as a possibility during your trip. You can easily inquire about different plans online or through a reputable agent you know. Online, you can get real time confirmation of your policy within minutes. You only need a credit card and some idea of what plan best suits the traveling you will be doing. Everything from basic trip cancellations due to illness to terrorist attacks crippling the travel industry or place you are traveling to can be included in the policies. They also range in coverage time from one day trips to one year living abroad situations. What ever be the type of traveling you may do in future; investing in travel insurance can keep your vacation from becoming a financial disaster.
Start Investing Early to Achieve Financial Freedom
Do you want to have financial freedom? Many people do and I’m one of them. Financial freedom is great because you can have the freedom to do whatever you want with your life. You can work whatever job you want at whatever time you want. You can even stop working if you want to. You don’t work because you have to. Instead, you work because you choose to.
To achieve it, one important thing you should do is learning how to invest. By knowing how to invest you can greatly increase your chance to achieve it. It can make the difference between living from paycheck to paycheck your entire life and having freedom financially. That’s because by investing you will make your money works for you. You won’t just let your money sits on the bank doing nothing. Instead, you make it work so that your wealth grows more and more. Eventually, your wealth will reach the point at which you achieve financial freedom.
But knowing how to invest is not enough, you should also start early. The earlier you start, the better you chance will be. That’s because by starting early you will have the compounding effect works for your advantage. Since compounding effect has the potential to grow your wealth exponentially, the more time you have the more growth you can expect. That’s why starting early is so important.
You need to start now. Don’t wait until the situation is perfect for you to start investing. While waiting for the perfect time, you are actually wasting a lot of time to have the compounding effect works for you. People who start earlier will have been far ahead of you by the time you find the “perfect” time to start investing.
You don’t have to start big. Start investing with whatever amount of money you can. Obviously, the more you can invest the better. But the most important thing here is time. Don’t let anything get in your way of investing early.
Financial Planning – Investment Guide
Today or rather last night, U.S. Stocks Slide to Worst Inauguration Day Drop in Dow Industrial History.
What an ironic situation when Barack Obama suppose to represent hope and change. So how will this incident impact us?
There is a saying in the market “When the U.S. sneezes, the World catches a cold.” Therefore, if past history serves us right, the market will drop for a short term. And if you like Warren Buffett treats Investment like a Business, this will serve a great buying opportunity. Why? Because when will you purchase more stocks (as in supply) for your business? You are right! When the prices are low! Aren’t the prices low now?
Well, most people invest a huge sum of money (sometimes all their savings) when they see an opportunity. This is no longer an investment but gambling. As we don’t inherit a prophetic thinking to predict the market as accurate. We wouldn’t really know where the market bottom will be. Hence, we should go in on a systematic approach through a Regular Saving Program (RSP) strategy which is a fixed amount across 12 to 24 months period. By doing so, we are taking advantage of the low prices at the same time, reduced the risk of investment.
Lastly, do you know that, looking back at U.S. history… In 1933, there was a 12 percent slide after Franklin D. Roosevelt’s election, gave way to a 75% rally! Past performance is no guarantee of future results but it’s the best indication.
Day Trading Hot Tip
Day traders live and die with clean and accurate data that is delivered in the fastest possible fashion. Without access to fast streaming data, day traders are doing to be left behind missing crucial points left, right and centre. Today we’ll take a look at the best computer set up for Day traders trading any market around the world.
Day Traders need to invest in the right Monitors
With talk about flexible hours, no boss and the ability take time off whenever you want, day trading seems to stack up as the ultimate way to multiply your money. Unfortunately nothing could be further from the truth and many day traders will tell you they spend upwards of 10-14 hour days in front of the PC. For this very reason it is critical that you have crystal clear monitors with plenty of size to them, given the fact that you’ll be staring at these things for a long, long time. Anything on or above 24 inches should be fine. Further to this you’ll need to consider at a minimum a dual monitor set up or perhaps 4 or even more. I’ve heard of some day traders who have up to 10 monitors spread over 3-4 computers. Incredible.
Day Traders require speed of information
Next on the radar for your computer set up when day trading is the speed with which you get your information and the speed at which your trading programs run. Here we’re talking about your internet connection speed, Amount of RAM and your computer’s main processor.
Internet connection
It goes without saying that a day trader requires access to information and they want it fast. Trading decisions are made quickly and so a fast internet connection (cable, ADSL2+ or a T1) is essential. Never mind paying a bit more for the faster speed as it all counts.