Important financial ratios
These financial ratios are fundamentals, when it comes to finding investment options that you want to invest in- the better you are at understanding these ratios, the better you will do in the stock market. Ratios are a fantastic way for beginners to start analyzing and finding stock options. They are simple and they alone can tell you a massive amount about a business
The price to earnings ratio explained
The P/E ratio measures the ratio between share price and earnings per share. It is an important metric for understanding whether a company is under or over valued in the stock market.
The price to book ratio explained
The price to book ratio is a financial ratio used to compare the companies current market price to book value. This again can allow you to understand how much a business is worth on paper, leading to a better understanding of the businesses underlying value.
The price to sales ratio
The price to sales ratio is a valuation metric, it is a ratio between the market capitalization of a business and it's revenue (most recent year).
The price to cash flow ratio explained
The price to cash flow ratio is used to compare a company's market value to its cash flow. It is calculated by diving the companies market cap by it's operating cash flow.
Return on assets ratio
This ratio is simple, it allows you to understand the percentage profitability of a companies assets. The more profit a company can create in the future, the more valuable it will be as an investment option.
Return on equity ratio
The return on equity is a measurement of a businesses profitability in relation to the equity.
Debt- equity ratio
The debt to equity ratio indicates the proportion of shareholders equity and debt used to finance a companies assets.
Price/earnings to growth ratio (PEG)
The 'PEG ratio' is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth.
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ONEZYPHER © LTD-2021: All rights reserved.