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Hi Sir,
In the lecture 10, eg 1 recording: You mentioned that it is important to look at earnings per share and not just profit growth, anybody can just make profit growth simply by getting more capital in.
Can explain what you mean by the statement of “anybody can just make profit growth simply by getting more capital in”?
Thanks!
Regards,
Joanna.I could potentially double a company’s profit just by making the company twice the size. However, to do that I have to raise capital, eg to buy a rival. I might overpay so that although profits double, I have issued far too ,any shares and eps are reduced.
Hi Sir,
Thanks!
With regards to Lecture 11 recording (11:24 mins), you mentioned that “its capital is less, and therefore the return on investment and residual income are both less”
How come it isn’t if capital is less, the return on investment and residual income should be greater and not both less right?
Thanks!
Hi Sir,
Can i check with you how come ROI allows comparison for division of different sizes?
ROI = Controllable Profits/opening capital employed.
If company A is twice the size of company B, its controllable profits will be twice, its opening capital employed will also be twice. Whereas Company B controllable profits & opening capital employed will be lesser as compared to Company A. Does it mean its impact will be net off and thus we are able to compare?
Thanks!
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