The P/E Behaving Normally
Of course, to spice things up, a high P/E can also mean the opposite of trouble; it may just be the marker of a true growth…
The P/E as a Red Flag
In fact, this kind of red flag has appeared repeatedly over fashionable sectors, perhaps most notable in 1998/1999 over the Internet industry. The surprising thing is…
The Reason For Connecting Price to Earnings
Any share price is built on expectations of a company’s future performance. Some of these expectations will be based on fundamentals such as the company’s recent…
How To Calculate Price to Earnings Ratio (P/E)
The P/E ratio is simple to calculate and probably the most consistent red flag to excessive optimism and overinvestment. It also serves, regularly as a marker…
Understanding the Importance of the Price/Earnings (P/E) Ratio
People who own stock in a company (public or private) want to know one thing above all else: Which way is the share price headed? Without…
Assessing a Company’s Debt-to-Equity Ratio
If you have ever in your life read anything related in investing then you have heard the term Debt-to-Equity ratio. The debt-to-equity ratio measures how much…
What is? Net Profit Margin
The operating efficiency of a company can be expressed in terms of net profit margin. Net profit margin describes the company’s ability to earn a net…
Other Important Financial Ratios
1. Activity ratios: cash conversion cycle, payables turnover, receivables turnover. These ratios give you an idea of what kind of revenues are produced by the firm’s…
Current Ratio
The current ratio is the relationship between a company’s current assets and its current liabilities. Remember to calculate the current ratio of a company simply divide…
Why Financial Ratios are important and how to use them
Financial ratios cover the basics of financial analysis: activity, liquidity, solvency, and profitability. But when it comes to understanding a business, you should view these ratios…
Assessing a Company’s Basic Versus Diluted Earnings Per Share
When you analyze a company, you have to do it on two levels: the whole company and the per share. For example, if you decide ABC,…
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