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swapnilkabra
@caswapnilkabra 4 years, 5 months ago 777 views

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A small thread to explain the tax implications of dividend of Rs.974 per share declared by #majesco Ltd which is winding up its business🧵👇

1. For starters, Majesco is declaring such huge dividend on account of it selling its US business. But, as an investor, should one think of buying the shares now? Let us find out.

2. The current market price per share of Majesco is Rs.980. This is almost at par with the dividend per share. Now, if you buy shares of Majesco, you will be entitled to dividend of Rs.974 per share.

3. Please keep in mind that dividend income is not exempt in the hands of the shareholders. It will be taxed as per regular slabs.

4. Say you are in highest slab of 30%, you will be taxed at that rate. To simplify you will be getting a net amount of Rs.681 per share (Rs.974- 30% tax).

5. Now, another important thing to keep in mind is the fact that the share price will be adjusted after it goes ex-dividend. Technically, the share price must be adjusted with the amount of dividend.

6. Hence, the price per share after it goes ex-dividend will be negligible. So, the share you bought at Rs.980 today will be at negligible price once it goes ex-dividend.

7. Suppose, the share trades at Rs.10 after it goes ex-dividend and you sell the shares at this level. This will result into short term capital loss of Rs.970. Now, this loss can be set off against short term capital gains.

8. However, by this you will be saving tax at 15% as short term capital gains on shares are taxed at 15%.

9. Hence, in the entire exercise, you will end up paying tax at normal rates (as per your slabs) to save tax of 15%.
So, do not chase this stock purely for dividend income.

10. Also, the company will deduct TDS at 10% before paying you dividend if the amount exceeds Rs.5000.

@gvkreddi, @Dinesh_Sairam, @darshanvmehta1, @finbloggers

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A simple thread to help all understand ‘Futures and Options’ in an easy way. Though I would personally not recommend new investors to trade in F & O, but it is always good to know things. 👇🧵

#Investing #Investors #Options #Futures

1. What is a ‘Derivative’?
‘Derivative’ simply means a product which is derived or dependent on some asset. This asset is called as ‘underlying asset’.
Let me simplify this by putting this example.

Both ‘Coffee’ and ‘Tea’ require ‘Milk’ for their making (assuming that you drink it that way, of course) . Hence, if the price of ‘Milk’ increases, the prices of ‘Tea’ and ‘Coffee’ will also increase.

To sum up:
1.‘Milk’ is the independent product. So, it will be considered as ‘Underlying Asset’.
2.‘Tea’ and ‘Coffee’ derive their prices from the price of ‘Milk’. Therefore, these are ‘Derivatives’ of Milk.

Hence, the derivative of a company will derive its price from the price of the shares of a company. Thus, share of a company is the ‘underlying asset’.

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While learning accountancy a student is taught to
👉Debit all expenses, credit all income.
👉Debit all assets, credit all liabilities.
👉Debit the receiver, credit the giver.
Why is it so?
Let us find out the rationale behind three golden rules of accounts. 👇🧵 (1/n)

'Balance Sheet' and 'Profit & Loss Account' are two important aspects to learn accountancy.
Let us first understand how to interpret a Balance Sheet. (2/n)

Balance sheet is a simple snapshot of ‘Sources of funds’ (‘Liabilities’) and ‘Application of funds’ (‘Assets’) as on a ‘particular’ day. (3/n)

It is important to note that the Balance sheet may change every day. That’s because the liabilities side and the assets side may change frequently.
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Suppose a businessman starts a business with his own money (equity/owner’s fund) and uses this money to buy various assets. (5/n)

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@caswapnilkabra

Layman’s explanation to PE Ratio and how it works.
A long thread! Do Bookmark this for patient reading.

#investing #investors #PEratio

1/ PE (Price Earning) ratio is one of the most important metric used by investors to make decisions while picking up stocks. But, more often than not, it is grossly misunderstood.
Let us decode this metric.

2/ Table of contents
•How to decide what to buy?
oCase A: Case A: Fresh Apple vs Stale Apple
oCase B: Costlier Fresh Apple v/s Cheaper Fresh Apple
oCase C: Apple vs Orange
•How to read PE ratio
•How is PE Ratio misunderstood?
•When will PE Ratio not work?

3/ How do you decide, what to buy?
Case A: Fresh Apple vs Stale Apple

You go to a market and buy an apple. You have a choice to make.
Apple ‘A’ is fresh and juicy. Apple ‘B’ is clearly stale. Apple ‘A’ costs you ₹.20 while Apple ‘B’ costs you only ₹.10.

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An extensive yet super simple thread to understand the role of @RBI and how it uses 'Repo Rate' and 'Reverse Repo Rate' 👇🧵

You may bookmark this for further use.

#economy #RBI #financialliteracy

1. Let us first understand the role of Reserve Bank of India in managing the Indian economy.
There are two major elements of the Indian economy.

👉The Businesses:
They are the producers of the goods and services. Any business would be happy if it is growing and the prices of the goods and services sold are ever rising. They would be more interested in ‘Economic growth’.

👉 The Households: These are the people who are consumers and they spend the money to buy the goods and services which are sold by the businesses. Any consumer would be happy if the prices of the goods and services are low. Hence, they would be interested in ‘Less Inflation’.

2. As the prices of goods and services rise, there will be economic growth in nominal sense but then there will also be inflation which is perceived as a problem in developing countries like India.

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@caswapnilkabra

Have you ever wondered why price of large cap cos like Reliance ind. Ltd. or Apple inc. fluctuates less in magnitude but share price of a small cap co witnesses huge volatility?
A simple thread to explain the economics behind stock fluctuations!👇🧵
#investing #financialliteracy

1. Penny stocks show huge volatility but on the other hand stock of large cap companies show little fluctuations.
Did you ever observe how ‘Foreign Exchange’ rates show little fluctuation and are range bound?
Let us understand the economics behind it.

2. In this thread we will learn two things,
👉Why large companies show quick change in their prices though the magnitude of change is less?
👉What causes huge jump in prices of penny stocks? Or why on a bad day they can easily fall with huge magnitude?

3. First things first. Let us understand who decides the price of goods? Is it the ‘Buyer(s)’ or the ‘Seller(s)’?
The answer to this basic question is that price is decided by both of them.

This is because,
👉 A ‘Buyer’ would always be willing to buy any commodity at lesser price.
👉 A ‘Seller’, on the other hand would try to sell his product at a greater price.

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This is a GREAT argument to pull up when talking to people about minimum wage. Some others nested below

"it doesn't affect me if companies pay low wages"

In reality, you're paying for it. Over 50% of people on food stamps are actively working. The leading employers are Walmart, McDonald's and Amazon.

As taxpayers, you're subsidizing corporations to pay literal poverty wages.
— Dan Price (@DanPriceSeattle) February 11, 2021

A large number of new jobs being created are minimum to low wage, so looking for a new job generally won’t increase pay.

Raising minimum wage helps things not directly related.

Helps Infant mortality? Yup.

Lowers Suicide? Yup.

Reduce smoking rates? You bet.

It also boosts the local economy! Minimum to low wage earners spend more % of their money, so an increase means more is spent, often in community!

Low paying jobs are often in sectors which would gain from this. More people spending money in your shop makes your business more money! Now you have more profits and increased labor costs are covered.

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"Common equity" belongs to the sponsor. They are generally last in the capital stack.

Sponsors generally co-invest. That means they hold both equity classes. A 10% co-invest is standard.

That means the GP has skin in the game. His 10% co-invest makes him both an LP and a GP.

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