Corporate Actions, Index & Clearing and Settlement

8/6/2019 Corporate Actions, Index & Clearing and Settlement

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CORPORATE ACTIONS, INDEX &

CLEARING AND SETTLEMENT


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CORPORATE ACTIONS

What is Corporate Actions?


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TYPES OF CORPORATE ACTIONS

CORPORATE

ACTIONS

MANDATORY VOLUNTARY


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MANDATORY CORPORATE ACTIONS

Assimilation (pari passu)

Acquisition

Bankruptcy Bonus Issue

Bonus Rights

Cash Dividend

Delisting De-merger

Stock Split

Reverse Stock Split

General Announcement

Initial Public Offering

Liquidation Mandatory Exchange /

Mandatory Conversion

Merger

Name Change

Par Value Change

Scheme of Arrangement

Stock Dividend


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VOLUNTARY CORPORATE ACTIONS

AGM / EGM proxy voting

Buy-back program (BIDS) / RepurchaseOffer

Dividend Reinvestment Plan (DRIP)

Dutch Auction Odd lot Tender

Rights Issue


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VOLUNTARY CORPORATE ACTIONS

Subscription Offer

Takeover

Tender Offer

Voluntary Exchange / Optional Conversion


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Mandatory Events with Options

Cash Stock Option

Merger with Elections

Spin-off with elections


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CORPORATE ACTIONS

What is meant by Dividend yield?

Example:ABC Co.

Share price: Rs. 360

Annual dividend: Rs. 10

Dividend yield: 2.77% (10/360)


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INDEX

BSE SENSEX

S&P CNXNifty


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CLEARING & SETTLEMENT & REDRESSAL

What is a Clearing Corporation?

It clears and settles all transactions

Provides financial guarantee

Provides risk management functions

National Securities Clearing Corporation (NSCCL)The Clearing Corporation ofIndia Ltd (CCIL)


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What is Rolling Settlement?

What is Pay-in and Pay-out?

What is a Book-closure/Record date?

What is a No-delivery period?

What is an Ex-date?


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What recourses are available to investor/client

for redressing his grievances?

IGC

What is Arbitration?

What is an Investor Protection Fund?


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ANALYZING A COMPANY?

Industry Analysis.

Corporate Analysis.

Financial Analysis.


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RATIOANALYSIS


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RATIO ANALYSIS

Liquidity Ratios

Meeting Short term financial obligations

Leverage/Capital structure ratio

Long term financial strength or soundness of a firm

Profitability ratios

Operating/management efficiency of a firm


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Liquidity Ratios(i) Current ratio = Current Assets

Current Liabilities

Higher the current ratio, greater the short-term solvency

(ii) Acid-test Ratio = Quick Assets

Quick Liabilities

Firms ability to convert its current assets quickly into cash


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Liquidity Ratios (iii) Turnover Ratios: measure how quickly certain current assets

are converted into cash or how efficiently the assets are employed by afirm.

Inventory Turnover Ratio =Cost of Goods Sold

Average Inventory

Gives efficiency of inventory management.

Debtors Turnover Ratio =Net Credit Sales

Average Accounts Receivable(Debtors)

Average Collection Period=Average Debtors

Average Daily Credit Sales

represents the number of days worth credit sales that is locked in debtors


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Liquidity Ratios Fixed Assets turnover ratio =Net. Sales

NetFixedAssets

Measures how efficiently fixed assets are employed.


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Leverage/Capital structure

Ratios: Debt-Equity ratio =Total Debt

Total Equity

Debt-Asset Ratio =Total DebtTotal Assets

Interest Coverage ratio =Earnings Before Interest&Taxes

Interest

Assess debt servicing capacity of a firm.


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Leverage/Capital structure

Ratios Debt Service Coverage Ratio (DSCR)

Measures debt service capacity of a firm

Used by Financial institutions for the period during which the termloan for the project is repayable.

=Profitaftertax+Depreciation+OtherNoncashExpenditure+Interest ontermloan

Interest onTerm loan + Repayment of term loan


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Profitability ratios:

Gross Profit Ratio (%) =Gross Profit* 100

Net Sales

Net Profit Ratio (%) = NetProfit* 100Net Sales

Return on Total Assets =Profit Before Interest AndTax

FixedAssets+CurrentAssets


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Profitability ratios:

Return on Capital Employed =NetProfitAfterTaxTotalCapital Employed

Total CapitalE

mployed = Total Fix

ed Assets + Current Assets -Current Liabilities

Return on Shareholders Equity=Net Profit AfterTax

AverageTotal Share holders Equity

Note: EPS & P/E can also be used to measure the profits availableto ordinary shareholders

P/E Ratio =MarketPrice per Share

EPS


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Documents

Corporate Actions, Index & Clearing and Settlement