Equity analysts use valuation ratio to make investment decisions. The most popular and widely used indicator among those is the P/E ratio. P/E ratio stands for Price to earnings per share ratio. In other words, the P/E ratio expresses the relationship between the current market price per share and the amount of earnings attributable to a single share. The other two important … [Read more...] about Valuation ratios: How to know value of a stock or security
Understanding operating, financing and investing activities of the company
All listed companies are bound to report their cash flow statement while announcing their annual financial results. Cash flow statement is part of the financial statements that the company publishes every year. For financial reporting purposes, business activities are classified into three groups: operating, investing and financing activities in the cash flow … [Read more...] about Understanding operating, financing and investing activities of the company
Importance of liquidity ratios in financial analysis
In simple words liquidity means how quickly you can get your hands on cash. In other words, how quickly you can get your money whenever you need it. For a company, liquidity means how quickly a company's assets can be converted to cash when it's bought and sold, or whenever you need cash. To measure liquidity of a company or organisation, certain universal financial … [Read more...] about Importance of liquidity ratios in financial analysis
What is Mark To Market Losses and gains
Banks in India are mandated to mark their investments to prevailing market prices and charge the gains or losses to the profit and loss account, also known as mark to market gains or losses. You will also find mark to market concepts in future contracts. In this article, you will learn what is Mark to Market losses and Gains and how its used. Mark to market losses or … [Read more...] about What is Mark To Market Losses and gains
How to calculate asset turnover ratio
Asset turnover ratio (ATR) measures the company’s ability to generate sales or turnover relative to the value of assets. It is used as a financial indicator by analysts to take an investing decision. Higher asset turnover ratio indicates that the management is more efficient in generating revenue from its assets. In contrast, a low ATR indicates inefficiency of the … [Read more...] about How to calculate asset turnover ratio
Profitability ratios: How to calculate and What do they tell you?
Profitability ratios are used by financial analysts to assess a company’s ability to generate earnings relative to its revenues for a period. It signals how efficiently the company has managed to generate profit and value for its shareholders. Company’s ability to generate profits on capital invested is the most important factor in order to find out its value and the … [Read more...] about Profitability ratios: How to calculate and What do they tell you?
What is dynamic support and resistance levels in stock market
The most basic tendency of traders is to buy stocks at a price level that they consider is very low and to sell a stock at a price that they consider is relatively high. When the majority of traders believe that price is relatively low, buying pressure overtakes the selling pressure and the price generally goes up. Likewise, when a majority of traders believe that a stock … [Read more...] about What is dynamic support and resistance levels in stock market
How to calculate solvency ratios and measure financial leverage of a company
Solvency ratio measures the company’s ability to pay its long term debt obligations. Solvency ratio provides information related to the adequacy of cash flow and earnings to cover interest, other fixed costs and principal payments as they come due. In other words, solvency ratio measures the size of a company’s profitability and compares it to its obligations to assess the … [Read more...] about How to calculate solvency ratios and measure financial leverage of a company
How net profit margin is used to analyse companies profitability
Net profit margin is calculated to know how much net income or profit is generated by the company as a percentage of revenue for a period. It's part of profitability ratios used by financial analysts to analyse a company’s income statement. You can present net profit margin in decimal form instead of showing as a percentage of revenue. If a financial analyst wants to know … [Read more...] about How net profit margin is used to analyse companies profitability
Bottom-Line vs. Top-Line: What’s the Difference?
On the company's income statement, top line and bottom line are the two most important lines that investors and analysts pay particular attention to. Income statement is one of the three most important financial statements reported by the company to let the stakeholders know the company's financial performance over a specific accounting period, which is typically for a … [Read more...] about Bottom-Line vs. Top-Line: What’s the Difference?