If you are listening to any financial analysts right now they will be telling you to ensure that you are investing money in companies which are struggling during the pandemic. There is of course a fine balance to strike between a struggling company which is robust, and one which is not and could pose a risk to your investments. Some investors have struck this balance perfectly, people like based investor who seems to have had the Midas touch this year. Others of course have not been so lucky.
If you are inspired by people like David and you wish to invest in a company, you first need to do your homework, and here is what you need to know.
Who is the CEO ?
In terms of the CEO all you need to know is a high level understanding of who they are, what they have done before and where they have worked previously. What you want to see is a CEO who as got a history of taking businesses forward and upwards. This information is easy to get and can give you some confidence in your investment.
What Is The Business Strategy?
If you are going to be owning an equity stake in the business then it is only right that you have an understanding of what their business model looks like. This will also give you the information to weigh up whether or not you think that they have a smart plan and whether or not you believe in it enough to invest your money.
Debt to Equity
Debt to equity is a very simple ratio which looks at the amount of debt which a business has, versus the volume of equity which is held by shareholders. This should always be a ration which is stronger on the equity side than the debt side, if it is the other way around then this is not a business which you should be investing in.
Another key piece of research which you need to do is more general one, looking at the sector on the whole. Let’s leisure and tourism sector, right now there is just too much uncertainty in this and it can be challenging to understand whether or not it is a smart investment. Whenever there is uncertainty, the best thing is to steer clear. Make sure that you have a full understanding of what the conditions are in the sector which you are looking to invest in.
Total Income and Gross Profit
And of course, you have to know how much money the business is making, and what percentage of that is profit. This is a crystal clear indicator as to how well the business has been performing and that will give you a better understanding as to whether or not you should invest in this particular company.
These are the key pieces of information which you need at your disposal before investing.