Landmine stocks usually refer to a seemingly safe company, but in essence there is a hidden crisis that could detonate at any time, facing the result of a stock price crash or even the company's eventual demise.。

In general, most companies do not appear to be much different before delisting because the public investors are not insiders of the investment company。Therefore, a careful look at the company's financial results, media information, as well as the company's top shareholding dynamics and reputation, it is possible to detect the crisis, so as to avoid the so-called mine stocks.。

Characteristics of mine unit enterprises

The average investor knows a company only from the news media, company financial reports or research reports to understand, and the company's financial report is nothing more than to reveal the company's physique and profitability。However, financial reports can also be falsified, and the key to cracking mine stocks is to understand the true meaning behind the numbers。

Five Ways to Avoid Mine Units

Method 1: Avoid companies where executives sell shares

Under normal circumstances, a company's executives should not be prone to a massive sell-off of their own stock if they have confidence in the future of their own company。

Method 2: pay more attention to the poor reputation of the enterprise

A business owner with integrity is one of the important factors affecting the development of the enterprise in order to lead the enterprise to the path of growth.。

Conversely, investors should pay special attention to, or avoid investing in, business owners who are unable to focus on their own business and like to squander, hype, peachy scandals or even unintentional operations.。

Nowadays, information is well developed and all kinds of news leave records on the Internet, so by examining the past remarks and opinions of business owners, you can assess whether the company's claims are credible.。

Some companies like to report good news but not bad news, and are overly optimistic about future development, investors should carefully observe whether past corporate statements can be truthfully fulfilled to avoid companies with questionable integrity.。

Method 3: Avoid enterprises with excessive pledge ratios of directors and supervisors

The pledge ratio of directors and supervisors is when the directors and supervisors of an enterprise borrow money from the bank by pledging their own shares and then use the borrowed money for other investments.。

Usually the pledge ratio is too high, which means that the company has the potential to be financially stressed, especially if the pledge ratio is as high as 60% or more, you must be especially careful.。Because if the company's business performance is poor, in the event of a sharp drop in the share price, it may be unable to come up with additional collateral, resulting in bankruptcy.。Therefore, investors should carefully evaluate or directly avoid enterprises with high pledge ratios of directors and supervisors.。

Method 4: Beware of businesses with abnormally increased accounts receivable

In general, the financial position of an enterprise can be observed through the income statement, cash flow statement and balance sheet, in which the cash flow statement accurately records the true status of the enterprise's cash inflows and outflows.。The key to the long-term operation of an enterprise lies in whether the cash inflow continues, and the cash flow statement can be used to examine whether the enterprise's accounts are suspected of being falsified.。

Most investors focus on the profitability of the company, such as EPS, when choosing an investment target, so in order to beautify the financial results, bad companies are most likely to change their income statements and balance sheets.。Therefore, whether the enterprise is really making money as it appears, it is necessary to further observe the cash flow statement, which is divided into three main parts:

Cash from operating activities: record the cash inflow of which items the enterprise has.

Cash from investing activities: record the cash disbursements of what items the enterprise has.

Cash for financing activities: record what funds the enterprise has borrowed and repaid.

Among them, the "accounts receivable" in cash from operating activities refers to the amount that the enterprise has shipped to the customer, but has not yet received the amount due from the customer.。A business that is profitable on its books but does not actually sell its goods shows a profit on its earnings report but is actually an inflated surplus。

If this happens in the long term, investors must pay attention to whether the enterprise is not as profitable as it appears, but in fact there is no cash inflow, which may lead to poor turnover or even closure in the long term.

Method 5: The sudden departure of the CFO

In the operation of the enterprise, in addition to the chairman and general manager, the most understanding of the actual internal operating conditions of the enterprise itself is the chief financial officer (CFO), and if the CFO leaves without warning or a company often changes the chief financial officer, investors must be vigilant.。

If a company has had the bad habit of making false accounts in the past, when the company is no longer able to clean up the mess, or when something big is about to happen, but there is a long financial departure or change, investors must be particularly careful, because even the CFO may not be optimistic about the future of the company.。

SUMMARY

As an investor, in addition to paying attention to high-quality enterprises with profit growth, but also to maintain a sense of risk, even the best enterprises should not be overly optimistic.。