How to identify potential wilful defaulters in advance?
How to identify potential wilful defaulters in advance? Please see the list below. Read the names very carefully. Are you investing in their shares? If yes, read their balance sheets carefully, read consolidated balance sheet include all group companies, and read the following columns: 1. Networth 2. Reserves 3. Debt 4. Book value 5. Interest cost 6. Operating Profit 7. Average Operating Margin in the industry 8. Operating profit 9. Net Profit 10. Promoters share (declining or going up and how much is pledged) These all are available on website of stock exchanges. Now how to identify, who will be the wilful defaulter? Step 1: The most important question is : What is the quality of governance in these companies? In this case please don't go by official records, check with employees of the companies and their suppliers and associates. Ask the following questions: A . Who are the key office bearers like Chairman,