you will find many companies which falsely provide bad customer service for short-term benefits. and gave priorities low cost over customer satisfaction. there are some points, you should analyze before buying stock in a company.
1) does the company have any product or service that has been making a profit in the market for many years? because with time, changes also come in the market like, things that people liked 10 years ago. Now same things aren't in demand like radio compared to Tv. keeping this fact in mind you choose such stocks, which is not only a good choice in today's environment but also good in future
2) Does the company earn long-term profit by increasing sales?some companies which seem profitable according to the coming years, but who have no plan further development such companies are good only for one-time profit and earn only short term profit but flop in long term. For a good long-term investment, you should search such company that has a well-devised plan for the future too.
3) Does the company have more sales organization than average?
No matter how many outstanding products and services a company creates, it will not be considered successful until it reaches its target sales, and even if the company is producing well but if its marketing is not done properly production will be wasted.
4) Is the profit margin of the company good?
sales will be considered successful only when there is profit from it if the company's mostly earnings and expenses are running out and the profit is zero, then understand that such a company is running in losses and there's no benefit in investing in it
5) What is the company doing to maintain or improve its profit margins?
the success of a company should not be judged on how much profit it earned at a particular time, but should also take care of past records and future perspectives. If the company does not do anything to maintain its profit should be consistent and long-term based.
6) Does the company have outstanding labor and personal relationship?
Any company can do well only when its labor is happy and works more diligently.
7) Is the company's executive relationship outstanding?
maintaining a good relationship with lower workers is as important as with a hired executive.
otherwise, the company may have to do compromise the quality of the service.
8) How good is the company's cost analysis and accounting control?
proper analysis and accounting are very important step by step analysis will report to the management the areas where the company needs to improve.
9) Does the company have a hold on its management?
small companies mostly depend on one-man management but in these companies, many situations also come, when their single most trusted person is not present, then one should also be ready for such a situation so that any kind of damage can be avoided.
10) How effective is the research and development of the company in comparison to its size?
you have to keep in mind that the expenditure incurred on the company's development has to be compared with the size of that company and not with the size of the other company. Example: If a big company spends $20000 and a small company is $5000, then it does not mean that you choose the big company directly. You have to check that despite the size of the company being big, its expenditure is less than its size.
11) Is the company short-range or long-range on profit? a company that gives importance to customer satisfaction at all costs only gets success in the long run. on the other hand, the companies which apply shortcuts, only get short-term profit.
12) Are there other profitable aspects of business that give the investor any clue?
this area is different for every company, for example, the retail company is concerned to what extent to which the company has the skill to handle real estate matters. But the same thing will not matter to any other company, it is necessary to look at many aspects to understand the real condition of the company.
13) Does the company's growth need equity financial?
the company should have enough cash to meet its capital requirements you should aware of it. If the cash is not sufficient for the needs of the company, then today or tomorrow the company may go bankrupt.
14) Does management openly talk to investors only when everything going well?
There is no such company which is always in profit but, yes management is expected to say the truth in any kind of trouble or failure. Often companies that are honest about their failure, definitely have a well-devised plan so that they can handle their problem. means, they should be honest with their investors and should also have a ready plan.
15) Does the company have such management whose honesty cannot be raised by anyone?
there are so many ways in which company often cheat their shareholders and fill their own pockets. To detect these frauds:- a) we can check by doing this whether the company owner keeps only his relatives in higher positions and gives them more salary than work
b) Has the company bought any property above the market rate or taken it at a rate?
if the answer to all these questions sounds wrong then you should never invest in this.
