Many FTSE 100 companies in London Stock Exchange will soon get busted.

Have you wondered why Dragons Den millionaires always invest in small companies? Because they get good attractive returns right from start. You will never see any Dragon investing in a BIG company.

Yes you hear me correct. Out of 100 companies listed on FTSE 100 London Stock Exchange are either in BIG BIG debt or their investment to profit ratio is too less. Companies could get busted.

Dont get fooled by the name or brand image. These companies are struggling for cash and are getting very very less profits. The share prices of these companies are ridiculously priced higher.

The share price of a company is calculated as follows:

Suppose, there is a company with £100 paid up share capital. There are only 2 shareholders in it who put £50 each. They traded for a year and got £100 revenue. Let’s say their expenses and taxes came to be £50. So the net income their company earned is £50. Meaning that both invested £50 each in the company and the company earned £50 as profit. Now if they both divide the profit, each will get £25 each. Therefore, on an investment of £50 both the shareholders earned £25 each. This means next year if they trade again and earn the same profit which is £25 again, so in exact 2 years they will earn total of £50. £25 each year.

So how much each person invested? £50? Right? Therefore, both of them got their money back which they invested in 2 years timeframe.

Now, if one shareholder wants to sell his/her share to a third person maybe his friend then obviously he will sell the share to his friend only if his friend is willing to pay a higher price than what the profit the shareholder has earned. In our example our shareholder invested £50 and earned £25. Now if the friend of our shareholder says I will give you £80 and you sell your share to me, our shareholder would have earned £30 by selling his share to his friend plus his £50 investment meaning £5 extra. Friend giving £80, however he would have only got £75 otherwise (£50+£25).

This is how every company’s shares are traded on the stock exchange.

Therefore, looking at all the FTSE 100 companies income and investments, I would say 95% of FTSE 100 companies are in BIG BIG Debt. You just go by my example and apply that to any company, you will find all companies are over bought in terms of their share prices.This is because the longer a company trades the worse is the return on investment. There is no peace of mind with BIG companies as they are in BIG BIG Debt. They are enjoying on your money. So pull out your money from BIG companies and just keep in your bank account and then find good smaller companies which will give you attractive returns.

Traders and brokers DONT work for you, they work for the FTSE 100 companies. The more investors they will attract, better money for the brokers. They will come up with all sorts of facts and data sheets which will be an utter nonsense. They will only make you believe what they think and to get commissions or money from the company. These brokers increase or decrease the price by showing different figures to different investors.

Dont go by the research of the brokers, that’s not correct data. Always obtain the audited income and balance sheet of a company.

I hope you understand the above calculation. If not you can contact me and I will guide you further.

Hare Krishna

 

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