Common Sense Investing Part 5: Rule 4 for Successful Investing.

Rule 4: Good Financials.

After selecting the business with long term prospects it is important to have a look through the financials before investing in the business.

Here are the key financials one has to look for in financial statements:

• Growth in Sales
• Growth PAT or Net Profit
• Consistency or growth in Net Profit Margins
• Low Long Term Debt to Equity Ratio
• Consistency or Growth in Return on Equity.

Lets understand it with example of Britannia Industries

Video Explanation