Nigerian Stock Market. Beware of foreign investors(1)
May 2nd, 2007 Ogbuotobo Chuks || chuks@stockmarketnigeria.com
By Ogbuotobo Chuks
In a developing country like Nigeria, there’s no doubt that the influx of foreign investments and expatriates is inevitable. Be it for business or pleasure, the benefits accruable from these foreign bodies are mutually beneficial in the long run.
In the Nigerian stock market, companies are not left out as foreign investors have continually pumped in huge amounts of money- be it as working capital or otherwise- into Nigerian companies to help boost service rendered and profitability as well.
The big question however that investors like you and I ought to ask ourselves is this- Is this money invested in the form of “debt” or “equity”? The answer to a large extent justifies or should justify if investing in a company that has received such leverage is viable or not.
“Debt” or “Equity”
These two terms are a form of leverage in business that is very vital to the profitability of a company. We will cover them in detail in subsequent articles but let’s briefly define them.
“Debt” is a form of loan taken which is repayable over a period of time but with interest. The interest here can be called the cost of obtaining the loan.
“Equity” on the other hand with respect to this write-up refers to selling an ownership interest in a business in exchange for some amount of invested funds/ money.
Think and act…
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