Tag: ratio
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Understanding P/E Ratio
The P/E ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of net…
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What is Profit margin? How to use it?
For a business to survive in the long term it must generate profit. Therefore the net profit margin ratio is one of the key performance indicators for your business. Profit margin is used as a measure of how much a company actually retains in earnings per dollar of revenue from sales of goods or services.…
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The PEG Ratio and Thoughts on Using the 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 (EPS), and the company’s expected future growth. It is a ratio used to determine a stock’s value while taking into account earnings growth. The calculation is as follows: PEG ratio =(Price/Earnings…
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The Price-to-book ratio, or P/B ratio
The Price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company’s book value to its current market price. It is calculated as share price divided by book value per share. Book value is most often calculated as Assets less Liabilities. However, some people conservatively calculate book value as Assets less Intangibles…