{"id":6224,"date":"2012-01-24T15:41:35","date_gmt":"2012-01-24T10:11:35","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?p=6224"},"modified":"2013-01-14T15:28:00","modified_gmt":"2013-01-14T09:58:00","slug":"management-business-analysis-company-research","status":"publish","type":"post","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/management-business-analysis-company-research\/","title":{"rendered":"Analyse management – Look at the jockey before you bet on the horse!"},"content":{"rendered":"

\"\"Excellent management can make the difference between a mediocre business and an outstanding one. Many a great businesses have been run in to the ground by poor management. Investing in a management which is infamous for a variety of things, giving false information etc will only make you lose your money. With many of India\u2019s corporate honchos being named in various scams that keep cropping up, it has become all the more important to invest your hard earned money in a company run by a trustworthy managemen<\/span><\/a>t<\/span>; a management that respects the interest of a minority shareholder.<\/p>\n

However, while we understand the significance of a strong, capable and unselfish management, assessing its competence is a difficult task. There is no full-proof method available to analyse a management. Think about it. How many of us could have predicted the Satyam fiasco before it actually came up?<\/p>\n

With this in mind, we at MoneyWorks4me.com<\/span><\/a> tried to find some pointers which could help us in arriving at some guidance to assess the worthiness of a management and decide whether this is the kind of management you want to stay invested with. We thought that while it\u2019s difficult to ascertain whether a company\u2019s management is the best or not, it is definitely possible to look at some qualitative and quantitative parameters which can help us separate the wheat from the chaff and objectively assess the quality of management.<\/p>\n

With this in mind, we created the Management X-RAY<\/span><\/a>.<\/p>\n

So, what is the Management X-RAY?<\/h3>\n

Management X-RAY is a unique way of analysing the Management of a company similar to the 10 YEAR X-RAY<\/span><\/a> used for analysing the historical financial performance of a company<\/span><\/a>. Management X-RAY consists of 5 key parameters that help us assess the quality of the management of a company. These 5 parameters are:<\/p>\n

\"5<\/p>\n

How do we assess these parameters?<\/h3>\n

To analyse the management of a company, we try to find answers to some questions related to these parameters.\u00a0 All the parameters are thus studied in detail and are measured against benchmarks we have arrived at after thorough research. They are then individually colour coded GREEN (Very Good)<\/span>, ORANGE (‘Somewhat Good’)<\/span> and RED (Not Good)<\/span>. <\/strong>Click on the image below to view MoneyWorks4me Management X-Ray.
\n<\/strong><\/p>\n

\"Snapshot<\/a><\/p>\n

Let\u2019s understand what each of these parameters tries to find out.<\/p>\n

Corporate Governance – How sound the corporate governance practices of a company are?<\/strong><\/p>\n

Corporate Governance signifies a set of processes or laws that affects the way a company is directed and controlled. The corporate governance practices of a company are analysed by taking in to consideration details such as composition of the board of directors, quality of independence, remuneration paid to the board of directors, etc.<\/p>\n

Board credentials – Is the management team equipped in terms of the skills required to run a company?<\/strong><\/p>\n

Management credentials refer to the skill sets (qualification, experience, etc.) that the management team of a company possesses. Relevance of qualification and experience is looked at in this case.<\/p>\n

Promoters\u2019 holding \u2013 Is it in the substantial interest of the promoter to run a company successfully?<\/strong><\/p>\n

Promoters\u2019 holding refers to the stake that the promoters hold in the capital of a company. A very low promoter stake can indicate reducing control and interest of promoters in the operations of the company; they might exit at any point of time. A very high promoter stake on the other hand could mean that promoters might overlook minority shareholders interests while taking decisions.<\/p>\n

Another key criterion that we look at is share pledging by promoters. Often overlooked, pledging has led to the downfall of many companies. Read more about share pledging here<\/a>.<\/p>\n

Transparency – Is a company\u2019s management transparent in sharing its business dealings and financials with investors?<\/strong><\/p>\n

The next parameter we try to assess is how transparent is a company with respect to disclosure of important and necessary information. We look at how comprehensive is the information provided in various media releases such as footnotes and disclosures, management discussion and analysis, Chairman\u2019s speech, quarterly results and conference calls. Further, we also look at how honest and forthcoming the management is with respect to its performance.<\/p>\n

Integrity – Is the management of a company trustworthy?<\/strong><\/p>\n

Integrity refers to the application of honest and fair business practices. Here we look if the management is involved in scams, frauds, other doubtful practices etc which would be a warning sign.<\/p>\n

Ideally, you would like all these 5 parameters to be Green (Very Good)<\/span>. If however, any of these parameters is Red (Not Good)<\/span>, it is a cause of concern.<\/strong><\/p>\n

Management analysis thus aims to protect you from companies whose management actions are such that they could risk the very existence of the company. Actions such as high pledging, very low promoter stake, excessively high director remuneration, etc. are often overlooked while analysing companies. These actions could hamper the profitability and growth of a company and also the health of your portfolio. A company with a bad management might give you short term gains, but it may turn out to be a bad long term bet.<\/p>\n

In a nutshell, Management X-RAY<\/span><\/a> at MoneyWorks4me.com helps you to gauge the trustworthiness of the management of a company which in turn will increase your confidence in making safe investment decisions.<\/strong><\/p>\n

The Management X-RAY along with the 10 YEAR X-RAY (10 year financial track record) of a company would give you a complete picture of the Company, thus helping you select safe companies to invest in!<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s an age old adage saying \u2018Bet on the Jockey, not on the horse\u2019. Modified to the investing world, this adage would read as \u2013 \u2018Analyse the company\u2019s management before investing in it!\u2019 Of course, one needs to be sure of the business prospects, but it is equally important if not more to be sure that your hard earned money is in the hands of trustworthy people who will grow your money and not destroy it.<\/p>\n

Our new tool \u2018Management X-RAY\u2019 helps you do exactly this and puts the people who wear suits and travel in chauffeur driven cars through a stringent test. <\/p>\n

So, let\u2019s find out how you can put the \u2018Management X-Ray to best use?<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[825],"tags":[627,630,124,125],"modified_by":null,"_links":{"self":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts\/6224"}],"collection":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/comments?post=6224"}],"version-history":[{"count":0,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts\/6224\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/media?parent=6224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/categories?post=6224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/tags?post=6224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}