If you are a shareholder, you must be interested in what is going on in the companies whose shares you own and how the company has been performing in recent months. The quarterly financial reports produced by companies are one method of determining this information.
What are the Quarterly Results of the Company?
Quarterly results are the window of opportunity provided to the general public to gain an understanding of the company's overall performance. These are created in a set format that a corporation must follow in order to be considered legitimate.
According to the instructions of the market regulator, the Securities and Exchange Board of India (Sebi), it is mandatory for every publicly traded business to publish quarterly results.
Publicly traded Indian corporations must report quarterly results to the stock market for the four quarters ending in March, June, September, and December according to Indian corporate regulations. Of course, the company's annual results will be included in the March results. In an era of fast change, quarterly results are a vital tool for assessing a company's long-term success.
Companies now not only release quarterly results with a year-over-year comparison, but they also provide guidance for the coming quarters. From an analytical standpoint, this is a crucial revelation for the analyst community. So, how do you go about analysing and reading a company's quarterly results? First, let's take a look at the significance of a company's quarterly reports and the 5 main indications to look for in them.
Top 5 Important things Consider in Quarterly Results
#1. Operating Profits
We should look at the operating earnings when looking at the quarterly performance. The operating profit reflects the current state of the business and the management's effectiveness. It's important to remember that a high operating profit signals a healthy company. The following is the formula for determining operational profit: Operating profit = Net sales – Operating expenses.
Salaries, utility expenditures such as rent and electricity, and other office expenses are all examples of operating expenses. It also covers costs for research and development and legal and banking fees. For the business's operating profit, other fixed and variable expenses that are part of the operating costs must be removed from net sales.
#2. Margins
The margins should also be examined because they indicate the company's safety net.' Profit should not be made at the expense of margin. As a result, a fall in the company's EBIT margin shows that the company's profitability has suffered.
#3. Net Profit
The net profit of a firm is defined as the operating profit less tax minus loan repayment minus the company's bottom line. When a company's financial health is in question, it is one of the most crucial indicators to look for, and it is the most sought-after sign in a quarterly earnings report.
It is important to note that the bigger the net profit of a firm, the higher the profitability of the company.
Don't forget to check: How To Read the Annual Report of a Company?
#4. Interest Cost
The amount of money spent in interest on a loan amount for the purpose of operating a business is referred to as interest cost. As a result, an increase in the interest rate reflects an increase in the amount of debt owed by the company.
#5. Earning Per Share
It's crucial for an investor to keep track of how the EPS is progressing. A greater EPS shows that the company is performing well, resulting in more significant profits for investors. The Earnings per share (EPS) is regarded as a very good indicator of a company's performance. As a result, the stockholders benefit from increased earnings. The EPS ratio aids investors in looking for a consistent stream of income by revealing the amount of room a firm has to increase its current dividend. When comparing firms, a company's EPS should always be taken into account.
Don’t Forget to Check: 5 Important Things to Consider in Quarterly Results Before Investing in Stock
Conclusion
Investors benefit from quarterly results since they provide information that explains the company's performance metrics for that quarter. We hope you found this blog to be interesting and that you will put it to good use in the real world. If you are looking to learn about the stock market in detail, check out the courses available at Nifty Trading Academy. NTA® provides the best online and offline stock market courses for beginners as well as experienced traders and investors.
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