Tear Sheet Definition Contents Example How To Prepare

Tear Sheet Definition

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How to Prepare a Tear Sheet?

It can be prepared differently by the different organizations, some of the guidelines on preparation are as under –

Collect the information from the official Source of the Company

For making the sheets, the source of information should be vital and carry proof. i.e., the information and figures should be official to give the correct information to the clients.

Determine the Valuable Information

After collecting the information, the preparer should determine the valuable information known to the investors due to the nature and importance of data from an investment point of view.

Summarize the Valuable Information in the Proper Manner

After collecting the valuable information, the information should be summarized properly, which the reader can understand to make him capable of making the investment decisions.

Present the Sheet in a Presentable Manner

After summarizing the information, the sheet should be presented properly and understandably. The information should be clear enough that it does not create confusion.

Example of Tear Sheet

An example of Tear Sheet about the security and investment details of XYZ Inc. is as under –

The following are the contents of the tearsheet –

Basic Financial Information

Tearsheet should contain the basic financial information like price of shares, the number of shares outstandingShares OutstandingOutstanding shares are the stocks available with the company’s shareholders at a given point of time after excluding the shares that the entity had repurchased. It is shown as a part of the owner’s equity in the liability side of the company’s balance sheet.read more, face value, week’s high and low market price, social services initiated by the company, market beta and beta of stockBeta Of StockStock Beta is one of the statistical tools and a component of the capital asset pricing model that quantifies the volatility in the prices of a security or stock concerning the market as a whole or any other benchmark for comparing its performance.read more, etc. so that the investor can get the complete and unambiguous information and make the correct decision about the investment.

Estimates and Future Prospects

The Tearsheet shall also contain the forecast of the future information to determine the future benefits to the investor and guides about the correct investment decision.

Important Ratios

The tearsheet also contains information about the important ratios like profit to sales ratio, price earning ratioPrice Earning RatioThe price to earnings (PE) ratio measures the relative value of the corporate stocks, i.e., whether it is undervalued or overvalued. It is calculated as the proportion of the current price per share to the earnings per share. read more, stock turnover ratio, liquidity ratio, etc., compared to the previous years’ ratio so that the investor should know whether the company is growing or not.

Analyst Recommendation

It also contains the analyst’s recommendation about the company’s performance and the suggestions of the analyst on investment in the company.

Sales Details by the Region

The test sheet also contains the sales data region-wise to evaluate future sales estimation and growth.

Stock Details

The test sheet also contains the stock details and process to evaluate the money blocked in the stock.

Price Details

The sheet also shows the price details about the company and the average price of the last 200 days to be displayed.