Showing posts from June, 2021

Important Financial Ratios Every Investor Should Know - Part 1

There are many important factors and ratios that need to be focused while investing in any stocks.  And today we are going to learn about the some important ratios which are widely used to analyse the stocks 1. P/E Ratio - Price to Earning Ratio As in formula says it is the ratio of the current share price to the earning of the company per share. Now you may be thinking that what is this Earning per share - EPS. let us understand EPS with an example, Company A has an overall earning of  Rs. 10,00,000 and there are 2,000 shares in market.  Then, EPS = 10,00,000/2,000 = 500 And further if the company A's shares are trading at Rs. 10,000 presently then P/E ratio will be P/E Ratio = 10,000/500 = 20 In very simple language P/E ratio says in above condiation is that you are paying Rs. 20 to earn Rs. 1 from the Company. 2. ROE Ratio - Return On Equity Ratio As the formula says ROE is a measure of the rate of return on the stock of a company. In other words, it tells investors how good the