4 Things To Consider Before Buying A Company’s Shares

When you buy the shares of a company, you automatically buy into that company. You are buying into both the assets and liabilities of the company.

Therefore, it will be wise to properly consider and research into the company before you invest your hard earned money. You will find information about the activities of the company online if it is a reputable company. Factors like the profitability of their business activities, the likelihood of growth and expansion and their stake holder relations history are points to consider. You should also look through their financial statements and annual reports.

The important points highlighted below should guide your decision making when buying the shares of a company:

1. EARNINGS
Consider the company’s earnings over a period of time. The number stated must always be higher than the previous year.

2. SALES
The number stated here must also be higher than previous years. If they have not made more sales, their profitability and growth are in question.

3. DEBT
The number stated here must never be more than the stated assets. It must always be lower than the previous year as well.

4. EQUITY
This refers to the value of shares offered by a company. This figure must always be higher than the year before.

If the company you are interested in buying their shares is scales through this four-point test, it is safe to invest your money. Your investment is likely to yield satisfactorily.