Welcome to the Investing for Beginners podcast! In today’s episode we will be talking all about red flags of a businesses’ financials and why we should look out for it. Red flags can either be really obvious or hidden deeper in the numbers and in this episode we will take a deep dive on each of them. Listen on as we discuss the questions you should ask yourself in encountering these red flags.
Timestamps of the episode:
-From profitable to non-profitable, a common overlooked red flag on businesses. [01:45]
-Increasing debt to equity ratio, another rising red flag that has been proven to be detrimental in the future of a business [04:00]
-Red flags are not necessarily deal breakers (mostly it is) but should make you ask yourself questions as to why it can be long term or not. [10:58]
-Why sometimes a increasing goodwill of an asset acquired can be a red flag. [14:24]
-Impairment losses are red flags and punishment for companies paying too much. It says a lot on the management’s skill of doing acquisitions. [19:30]
-Serial acquirers can either be great or bad as M&A’s should be value accretive. Goodwill is the one to look out for on these companies. [28:30]
-Decreasing return on invested capital (ROIC) and gross margins are another red flag of a business. [30:05]
-A plethora of red flags is not a sign to short a company. [36:10]
Note: Timestamps may differ and are approximate, depending on your podcast player.
For more insight like this into investing and stock selection for beginners, visit stockmarketpdf.com
Today’s show is sponsored by Factor:
Head to factormeals.com/investing50 and use code investing50 to get 50% off.
SUBSCRIBE TO THE SHOW
Apple | Spotify | Google | Stitcher | Tunein
You can find the transcript of today’s show below:
