Picking the right stocks in the market to invest in is not an easy task, and your success in picking the right ones is not always guaranteed.

Be that as it may, these eight signs can help you determine if a stock is getting set to crash.

1. If the company has a negative cash flow.

Cash flow is a company’s lifeline. When a company’s cash payments are bigger than its receipts, it means the company has a negative cash flow that can eventually lead to insolvency.

2. High Debt to Equity Ratio

A debt-to-equity ratio measures a company’s bankruptcy risk by comparing its long- and short-term debts to its shareholders’ equity. A high ratio usually means the company has been aggressive in financing its growth with debt. Eventually, this debt can become too much to handle.

3. Interest coverage ratio

The interest coverage ratio reveals if a company is having difficulty paying its debt. If a company’s ratio is below 1, it can’t meet its debt obligations with the period’s earnings before interest and tax.

4. The usual share price decline

The fourth sign is a decline in share prices. A sustained decline almost always precedes a corporate collapse. As an example set in the US, Enron’s stock started falling 16 months before it went bust. But also, a declining stock can signal a buying opportunity. Consider the next four signs to distinguish between a collapse and an opportunity.

5. Listen to profit warnings

Profit warnings should be taken very seriously. Growing evidence suggests markets under-react to bad news. Don’t forget to always listen to analyst calls, as you can glean very useful information from the questions being asked by analysts who cover the stock.

6. Watch out for stock market activity of the company owners, directors or executives

Companies must divulge insider trading, as in the purchase and sales of shares owned by substantial shareholders or directors. They have the most current intel, so heavy selling or buying can be a sign.

7. Sudden exit of key staff of the company

The sudden resignation of key executives or directors can also be a bad sign. Companies may sack a key executive as a sign that the company has had a terrible misstep and is making management changes as atonement, or as a sign of realization that management has been under-performing.

8. Investigations by regulatory bodies

Finally, formal investigations by regulators such as SEC, frequently precedes a collapse. Companies may dabble into wrongdoing in order to stay afloat when they get into financial distress. When the company is being investigated, it is very likely that they have been caught in the process, and will pay for their crimes. And the shareholders will ultimately suffer for it.

Source: http://www.ebtsconsults.com/2015/10/these-8-signs-can-tell-you-if-stock-is.html

Just have a question, what is stock?

CountDracula:
Just have a question, what is stock?

the link below hopefully should clear your doubts, insinuations, assumptions et all about Nigerian stocks
https://www.nairaland.com/1131485/nigerian-stock-exchange-market-pick

Okk

Ok

9. When Alison Madueke is the treasurer..

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I really want to do forex but Nigerian dwindling economy will not allow. Am looking @ US stock

if you are into stocks now is the time to buy Facebook stocks. crazy profits have been realized this year

Thanks for the tips

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Plovr was here

Real signs I tell you. Instead of buying stocks from big companies in Nigeria, I'd rather invest in a promising SMB.

MUST READ
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I ll keep that in mind

....and I have Financial Statement Analysis exam in 1 hour. What a coincidence

Nice analysis. You should have brought it down to the layman's level. Some peeps here are not conversant with some of the terms you used.

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continue reading

Buy stocks at ur peril

Don't buy stocks except u plan owning controlling interest in the said company in nigeria for now.
I'm not gonna buy Nigeria treasury bill sef until the nigeria economy has hope

what is the difference between Stock and NairaBet?

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Brainy indeed

Honestly, I entered this thread cos I didn't understand the topic, now I must say I've been educated. Thanks OP

Thanks for sharing

lekjons:
9. if Alison Madueke is the treasurer..

One of the very few educative threads that has made it to the front page.

Thanks for sharing. Bookmarked.

Don't really know much about this looking to invest in stocks soon op might need your help

Dynamitechick:
Don't really know much about this looking to invest in stocks soon op might need your help

ur legs re dynamite. I would love to see more

Nice read.

Adesiji77:

it's true na

...If Cecilia Ibru is the Group MD.

If u're looking for advice on stock, holla me! I'm a Broker...I may give you some tips.

.

A good one

Interesting read. Although the points are a little simplistic, the wording of the article isn't simple or easy to understand.
Also the op forgot to mention where one can see these 'signs'. How we go take see the signal before we see the sign?


Modified:

If this was a thread for naked pictures or that sort of stuff, e for done full. Nigerian youths wake up. This info is more valuable than nudies.