Audit doubt

Neeti,

when the gold is pledged by the customer with the NBFC, it does not constitute the property of the NBFC and is kept with the company only as security. NBFC is not supposed to pledge or transfer it to anyone.

normally, the company takes the gold and pledges it with someone in order to raise finance. this is done without the knowledge of the owner of the gold.

this is fraud in the sense that the company is giving as security something which itself does not own. i.t. it is raising funds by giving as security something whihc is owned by a third party.

- Ankit

thnx ankit. i have 2 more doubts:-

1) what about the money that the nbfc has to repay to the company with which it pledges the customer's gold?

2) is it financially rewarding for the nbfc?

Respected All,

I am now examining the some company reports which is listed in Shares Market. Some people tells that if bookvalue is more than current share price then it should be buy and some tells that is Earning Per Shares is positive then it is good and some one tell that if Price Earning ration is good the it should be buy.

But, when in one company I found that EARNING PER SHARES IS (-) NEGATIVE FOR RS.-4.58 AND BOOK VALUE IS RS.115/- AND CURRENT SHARE PRICE IS RS.59/- THEN IN THIS CASE HOW I HAVE TO JUDGE THIS COMPANY ?. I KNOW THAT EPS = NET PROFIT AVAILABLE AFTER TAX  / DIVIDED BY NO OF OUTSTANDING SHARES.

PLEASE ADVICE AND SUGGEST SOME OTHER SITE IF ANY ONE HAS KNOWLEDGE.

I AM STUDIED FROM WWW.MONEYCONTROL.COM.

THANKS IN ADVANCE

Dear TITA,

If EPS is (-), this suggests that the company's present operating results are good.  If Book value is more, this suggests that the company's earlier operating results are good.  Review the Earnings for about 2 years quarterwise and see the trend.  If the trend shows a positive growth in EPS (current - EPS may be a result of some extra ordinary factor), you may decide to buy.

Somebody's advise that if Bookvalue is more than current share price then it should be buy is not correct at all.  In Indian share market a good percentage of shares will quote less than their market price