In the often stereotypical world of accounting, Glen Palmer has been labelled by some as an un-accountant accountant. While this sits comfortably with Glen, he is still very capable with numbers, as you would expect of an experienced accountant and business advisor, but you can also count on Glen Palmer to know the cricket and football scores.
General Advice From Glen
Understanding Books and Balance Sheets
Glen has not provided any general advice.
Questions to Glen
From TopStocks Members
Tax as a trader v's an investor
Q. Hi Glen,
In 2009 I was trading many shares. In 2010 I bought silver shares and held, I have not sold any shares in over 12 months, nor plan to sell for at least another 12 months. When being assessed for taxation, will I be taxed as an investor or a trader? What criterion do they use?
This is a very common issue that I see. To be considered a trader by the ATO you need to be in the business of share trading. This in general terms requires a documented trading strategy and a significant volume of transactions over a long period of time. The ATO will usually consider an individual to be an investor unless they can demonstrate that they went about their share trading in a very business like way. This can be a complex question and is determined by the facts of each situation so you should take some professional advice in arriving at your conclusion.
Rule of thumb for dividend payments
Q. Hi Glen, If a company has stable cash flows (positive) and no capital requirements for expansion, plant and equipment etc is there a rule of thumb re the % a company should pay re franked dividends from retained earnings? Thanks. emb
Unlike valuations of a company where there are many rules of thumb which can be used payment of dividends do not have a generally applied rule of thumb. There is usually a need for reinvestment of some part of a companys' profits whether it be in advertising & promotion if not capital expenditure. This will therefore limit the amount remaining to be distributed. It will often be determined by comparison to other listed companies in the same market sector.
What to look for
Q. what is something we can all look for when going over these that should stand out as a negative or positive apart from cash on hand?
This is a very broad question and could result in a number of books being written in response. Listed company financial statements are controlled by accounting standards. These dictate how various things must be presented to shareholders in the reporting. The balance sheet is only one part of any assessment an investor would look to make if considering an investment. It is also important to remember it only summarises the past not the present or the future.
Lack of detail in corporate accounting
Q. When it comes to reporting why don't company's give more detail? Thinking Cost of production, details on plant and equipment, expenses, creditors and debtors. The Basic nuts and bolts of how the company operates. Surely the only way asses management performance is on the day to day decisions they make.
The information you are looking for is available in the Annual Report prepared each year. If you look at the Notes to the Financial Statements this is where all the detail is provided. The level of information you are seeking is typically only available in a private company investment rather than a share in a public company. As a public company investor the only critical measure of performance is the share price.
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