Introduction to Technical Analysis

For Presentation Notes in PDF format click here.

For better understanding through video tutorial click here.

Technical Analysis is

•       The method of Forecasting the direction of prices.

•       By studying the past market data.

•       Market data comprise of Price and Volume.

•       With the help of charts showing the trading history and statistics.

•       To make buy or sell decisions.

Definition of Technical Analysis

•       Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, past prices, and volume.

•       Technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

•       Technical analysis is a methodology that makes buy and sell decisions using market statistics. It primarily involves studying charts showing the trading history and statistics for whatever security is being analyzed.

Fundamental Analysis

•       A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors including macroeconomic factors and company-specific factors

•       The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price, with the aim of figuring out what sort of position to take with that security (under-priced = buy, overpriced = sell or short).

Difference between the two

Assumptions of TA

1.     The market discounts everything.

2.     Price moves in trends.

3.     History tends to repeat itself.

The Importance Of Volume

•       What is Volume?

Volume is simply the number of shares or contracts that trade over a given period of time, usually a day. The higher the volume, the more active the security.

•        Any price movement up or down with relatively high volume is seen as a stronger, more relevant move than a similar move with weak volume.

In the other blogs we will study the Concepts related to TA

•       Trend Analysis

•       Support and Resistance

•       Charts and their types

•       Chart patterns

•       Technical Indicators and so on…

My Youtube Tutorial Videos

My YouTube Channel link :-

BBA MBA Concepts by Neha Sharma

Topicwise List of  YouTube Tutorial Videos :-

Technical Analysis

Part 1 - Introduction to TA

https://youtu.be/6eFw1oCnhaI

CVP Analysis

For understanding the concept of CVP Analysis:- 

Part 1

https://youtu.be/ZUD1ygOdPU8

For more numerical go to the following parts of the series :-

Part 2

https://youtu.be/sHXEdXdrFJE

Part 3

https://youtu.be/TM_I3Ox-v6s

 Part 4

https://youtu.be/1Pa6ocR7_xA

Part 5

https://youtu.be/RxBmbyNxczw

Understanding Fixed and Variable cost

https://youtu.be/s5Y5Aeh_dZc

Cost of Capital Part 1

https://youtu.be/TE1xIGHKyrM

Introduction to Organisational behaviour

https://youtu.be/u5iFxzB_wsg

Henri Fayol’s Principles of Management

https://youtu.be/FfaDWT46vCY

Concept of C-V-P Analysis

C-V-P Analysis means Cost Volume Profit Analysis

It is the Relation between Cost incurred to manufacture a product, Volume or number of units produced and Profit generated by selling the product.

Lets understand with the help of a graph

It is the graph between amount and the number of units.

You can see that there is a Fixed Cost Area and Variable Cost Area.

Fixed cost is the cost which is independent of the number of goods or services produced. For example cost incurred to buy land, machinery etc. or the rent of the place or office etc.

Variable cost is the cost which varies with the number of goods produced. For example the cost of raw material or cost of packaging etc.

Now you can also see a Total Cost Line and a Total Sales Line.

If you observe, you can see that the income or sales line starts from zero and the cost line starts from $ 1,000,000, it is because when a first product is sold then the company will start earning profit , before that there was no profit but before the company starts manufacturing the product they already have spend their fixed cost in establishing the plant and machinery.

now you see as the goods are manufactured their variable cost increase with the number of goods produced and as they are sold the income generated in increased and hence there is one point where the cost incurred becomes equal to the income generated and this point is called Break Even Point.

Break Even Point

It is the point at which there is no profit and no loss and the revenue equals the expenditure. We can see in the graph that we get two BEP points , one on X axis in terms of number of units produced to cover all the cost with income and the other on the Y axis, which shows the amount of sales required to cover all the cost incurred.  You will notice that after this point the company will start generating profit.

Red and Green shaded area

Red area is the area of loss and green area is the area of profit.

In this chapter you will find few formulas , so let me revise few concepts and correlate them with the new concept.

So, lets recall the income statement format.

Sales

- Variable cost (also called Marginal cost)

-------------------------------------------------

Contribution

- Fixed cost

-----------------------------

EBIT ( Earning before Interest and tax)

- Interest

-----------------------------

EBT  (Earnings before tax)

Just remember this format as this will help you in deriving the unknown figures from the known ones.

Here we will study the relation between profit and volume of sales known as P/V Ratio.

P/V Ratio  (%) = Contribution * 100

                                       Sales

If the income statement of two different years is given then

P/V Ratio  (%) =  Change in contribution * 100

                                       Change in Sales

Now another concept which we must know is concept of BEP or  Break Even Point. As we have already discussed while discussing the graph that we will get two BEP points one on X axis (in terms of Number of units produced and another on Y axis ( in terms of Amount of sales)

BEP (in units) =              Fixed cost       

                            Contribution per unit

BEP (in amount) =              Fixed cost       

                                             P/V Ratio

In the next concept we will learn to find out how much Sales has to be done to earn the desired profit. For example , we decide that this year we decide to earn a profit of $1,000,000 , now we will have to find out the amount of sales to be done to earn this amount as profit. For this we will apply the following :-

Sales to earn desired profit (in units) =    Fixed cost + Desired profit  

                                                                   Contribution per unit

Sales to earn desired profit (in amount) = Fixed cost + Desired profit 

                                                                               P/V Ratio

Last concept of this chapter is MOS ( Margin of Safety)

MOS = Actual Sales - BEP Sales

Its the time for you to revise all the above concepts and get prepared for the Numerical problems.

Basics of Technical Analysis

For Downloadable Notes in PDF format Click :- Introduction To Technical Analysis

Product Life Cycle

For Downloadable Notes in PDF format click :- PLC
For Power Point Presentation click :-  Product Life Cycle
For Video Tutorial Click here.

What is Product Life Cycle?

•       A new product progresses through a sequence of stages from introduction to growth, maturity and decline and this sequence of stages is known as Product Life Cycle.

•       PLC is directly related to Market Situations (like competitors) and hence it directly affects the marketing strategies and marketing mix.

Graphical representation of PLC

Introduction Stage

•       Product is introduced in the market for the first time.

•       Thus, there may not be ready market for the product.

•       Build Product awareness and create demand for the product.

•       Low sales and profit.

Marketing Mix at Introduction stage

•       Product branding and quality level is established and intellectual property protection such as patent and trademarks are obtained.

•       Pricing strategy to be obtained is either market skimming or market penetration.

•       Distribution is selective until consumers show product acceptance

•       Promotion aims at building product awareness and educate consumers about the product.

Growth Stage

•       Demand of the Product increases and size of the market grows.

•       Sales and profit also goes up.

•       Competitors enter the market.

•       Follow competition oriented pricing strategy.

•       Marketing and distribution become decisive.

Marketing Mix at Growth stage

•       Product quality is maintained and additional features and support services may be added.

•       Pricing is maintained as demand increases with little competition.

•       Distribution channels are added as demand increases and consumers accept the product.

•       Promotion is aimed at a broader audience.

Maturity Stage

•       Demand reach the saturation point.

•       Supply from competitive firms increase.

•       Price competition becomes intense and exploits the brand loyalty.

•       Product and packaging modification.

Marketing Mix at Maturity stage

•       Product features may be enhanced to differentiate the product from that of competitors.

•       Pricing may be lower because of the new competition.

•       Distribution become intensive.

•       Promotion emphasizes product differentiation.

Decline Stage

•       Sales and profit begins to fall.

•       Demand shrinks.

•       Prices and margin gets depressed.

•       Firms try to link up the sales of these product to some other premium product.

Marketing Mix at Decline stage

•       Maintain the product, possibly rejuvenating it by adding new features and finding new uses.

•       Harvest the product, reduce cost and continue to offer it possibly to the loyal niche segment.

•       Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.

Introduction To Managerial Economics

For Downloadable Notes in PDF Format click :- Introduction To Managerial Economics

Concept of Management

For Downloadable Notes in PDF format Click :- Concept of Management

Entrance Exams

Aptitude and Reasoning Preparation

I have a separate blog which focuses on Quantitative Aptitude,Logical Reasoning,Data Interpretation and Verbal Ability.
Moreover, I will also guide you to prepare for Group Discussion and Interview Preparation.

For Notes and Worksheets Click Here

For the Video Tutorials Click Here

How to solve a Case Study

Introduction to Marketing Management

Introduction to HRM

Introduction to OB

For the Downloadable Notes in PDF format Click :- Introduction To Organisational Behaviour

Numerical Problems on CVP Analysis

1. MBA ltd has supplied with the following information:

Total Fixed Costs 18,000

Total Variable Costs 30,000

Total Sales 60,000

Units Sold 20,000

Find

a. Contribution per unit  b. B.E.P. c. M.O.S. d. Profit e. Volume of Sales to earn profit of Rs.24000.

  

2. Calculate MOS.

Given

Particulars	A	B
Sales	1,00,000	1,00,000
Total Cost	80,000	80,000
Variable Cost	30,000	50,000
Fixed Cost	50,000	30,000

3. Given:-

Variable Cost per Unit = R. 75,

 Selling Price per unit is Rs. 100,

 Fixed cost = Rs. 2, 70,000.

If the BEP is to be brought down to 9000 units, what will be selling price per unit?

4. Given

Particulars	A	B
Sales	1,50,000	1,50,000
Variable Cost	1,20,000	1,00,000
Fixed Cost	15,000	35,000
Profit	15,000	15,000

You are required to:

• Calculate the break-even point for each business
• Calculate the sales volume at which each business will earn Rs.5,000 Profit.
• State which business is likely to earn greater profit in conditions of:

1. Heavy demand for the product
2. Low demand for the product, and, briefly give your argument also.

Henri Fayol’s Principles of Management

Henri Fayol’s principles of management

For downloadable Notes Click :- Henri Fayol's Principles of Management

(Note :- In order to remember the 14 principles ,I tried to make a small Acronym which will not let you forget any one of them and you can easily recall them at the time of exam.

(DAD U C USSR?....O I SEE) which means that there are D -DIVISION OF WORK, A- AUTHORITY AND RESPONSIBILITY , D - DISCIPLINE And so on..

1.  Division of work -In practice, employees are specialized in different areas and they have different skills. Different levels of expertise can be distinguished within the knowledge areas (from generalist to specialist). Personal and professional developments support this. Work should be divided among individuals and groups to ensure  that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization and specialization promotes efficiency of the workforce and increases productivity. In addition, the specialization of the workforce increases their accuracy and speed.The division of work is the course of tasks assigned to, and completed by, a group of workers in order to increase efficiency. Division of work, which is also known as division of labour, is the breaking down of a job so as to have a number of different tasks that make up the whole. This means that for every one job, there can be any number of processes that must occur for the job to be complete.

2. Authority and Responsibility -The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility. In other words, Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority.

3.  Discipline - It is often a part of the core values of a mission and vision in the form of good conduct and respectful interactions. This management principle is essential and is seen as the oil to make the engine of an organization run smoothly.A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.  Employees must obey and respect the rules that govern the organization. Good discipline is the result of effective leadership.

4.  Unity of command - Workers should receive orders from only one manager. In other words, Every employee should receive orders from only one superior.  If tasks and related responsibilities are given to the employee by more than one manager, this may lead to confusion which may lead to possible conflicts for employees.

5. Unity of direction - The entire organization should be moving towards a common objective in a common direction. Each group of organizational activities that have the same objective should be directed by one manager using one plan for achievement of one common goal.

6. Subordination of individual interests to the general interests - The interests of one person should not take priority over the interests of the organization as a whole. In other words, The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole. The primary focus is on the organizational objectives and not on those of the individual. This applies to all levels of the entire organization, including the managers.

7. Remuneration -Motivation and productivity are close to one another as far as the smooth running of an organization is concerned. All Workers must be paid a fair wage for their services. Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a worker’s rate of pay.    

8. Centralization - Centralization refers to the degree to which subordinates are involved in decision making. Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working.

9. Scalar chain - The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.  

10. Order - this principle is concerned with systematic arrangement of men, machine, material etc. there should be a specific place for every employee in an organization. For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible. 

11. Equity - Managers should be kind and fair to their subordinates and all employees should be treated as equally as possible.

12.Stability of tenure of personnel - High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies. Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.

13.Initiative - Employees who are allowed to originate and carry out plans will exert high levels of effort. Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction. 

14.Esprit de corps - Promoting team spirit will build harmony and unity within the organization. Management should encourage harmony and general good feelings among employees. The management principle ‘esprit de corps’ of the 14 principles of management stands for striving for the involvement and unity of the employees. Managers are responsible for the development of morale in the workplace; individually and in the area of communication. Esprit de corps contributes to the development of the culture and creates an atmosphere of mutual trust and understanding.