Basics of Stock Market # 2:Financial Ratios of Stock Market

Basics of Stock Market # 2:Financial Ratios of Stock Market #stockmarket #viral #fundamentalanalysis
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• Basics of Stock Market...
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Description:
A. Profitability Ratios:
1. PAT Margin (Net Profit Margin):
• Formula: PAT Margin = (Profit After Tax / Total Revenue) * 100
• Measures overall profitability.
• A higher PAT margin implies better profitability.
• Compare trends with previous years or competitors.
• Example: If a company has a PAT of $50 million and a total revenue of $200 million, the PAT margin would be (50 / 200) * 100 = 25%.
2. Return on Equity (ROE):
• Formula: ROE = (Net Income / Shareholders’ Equity) * 100
• Example: If a company's net income is $30 million and shareholders' equity is $150 million, the ROE would be (30 / 150) * 100 = 20%.
3. Return on Assets (ROA):
• Formula: ROA = Net Income / Total Assets
• Example: If a company's net income is $40 million and total assets are $400 million, the ROA would be 40 / 400 = 0.1 or 10%.
4. Return on Capital Employed (ROCE):
• Formula: ROCE = PBIT / Total Capital Employed
• Example: If a company's PBIT is $60 million, and total capital employed is $300 million, the ROCE would be 60 / 300 = 0.2 or 20%.
B. Leverage Ratios:
1. Debt-to-Equity Ratio:
• Formula: Debt-to-Equity Ratio = Total Debt / Shareholders’ Equity
• Example: If a company has total debt of $100 million and shareholders' equity of $150 million, the debt-to-equity ratio would be 100 / 150 = 0.67 or 67%.
2. Interest Coverage Ratio:
• Formula: Interest Coverage Ratio = EBIT / Interest Expense
• Example: If a company's EBIT is $80 million, and interest expense is $20 million, the interest coverage ratio would be 80 / 20 = 4.
C. Operating Ratios:
1. Working Capital Turnover:
• Formula: Working Capital Turnover = Revenue / Average Working Capital
• Example: If a company generates $400 million in revenue and has an average working capital of $100 million, the working capital turnover would be 400 / 100 = 4.
2. Total Assets Turnover:
• Formula: Asset Turnover Ratio = Operating Revenue / Average Total Assets
• Indicates efficiency in generating sales with assets.
• Ratios vary by industry.
• Example: If a company's operating revenue is $500 million and average total assets are $1,000 million, the asset turnover ratio would be 500 / 1000 = 0.5 or 50%.
D. Valuation Ratios:
1. Price to Earnings Ratio (P/E Ratio):
• Formula: P/E Ratio = Market Value per Share / Earnings per Share
• Example: If a company's market value per share is $50, and earnings per share is $5, the P/E ratio would be 50 / 5 = 10.
2. Price to Sales Ratio (P/S Ratio):
• Formula: P/S Ratio = Current Share Price / Sales per Share
• Example: If a company's current share price is $30, and sales per share is $10, the P/S ratio would be 30 / 10 = 3.
3. EV/EBITDA Ratio:
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. In the stock market, EBITDA is a financial metric used to assess a company's operating performance and profitability. It provides a snapshot of a company's ability to generate operating income by excluding certain non-operating expenses.
• Lower ratio suggests lesser valuation.
• A high EV/EBITDA signifies that a company is highly likely to be overvalued.
• Example: If a company's enterprise value is $500 million, and EBITDA is $100 million, the EV/EBITDA ratio would be 500 / 100 = 5.
4. Price-to-Book Ratio (P/B Ratio):
The Price-to-Book Ratio (P/B Ratio) is a financial metric used in the stock market to assess a company's valuation in relation to its book value. It compares the market price of a company's stock to its book value per share, providing insights into whether a stock is overvalued or undervalued.
5. Price/Earnings to Growth ratio (PEG Ratio):
The PEG ratio, or Price/Earnings to Growth ratio, is a stock market valuation metric that takes into account a company's earnings growth rate. It is used to assess whether a stock is overvalued or undervalued based on its price-to-earnings (P/E) ratio and expected earnings growth.
The formula for the PEG ratio is:
PEG Ratio= P/E ratio/Earnings Growth rate​
This Video is for educational purpose only. Disclaimer to be followed in the video. I am not SEBI registered advisor.
Before taking any investment decision, please consult your financial advisor or do your own research. This channel is not be responsible for any financial gain as well as financial losses.
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[@MoneyMakesMoney86]

Basics of Stock Market # 2:Financial Ratios of Stock Market #stockmarket #viral #fundamentalanalysis
@@@@@ Basics of Stock Market #1: #Dividends #StockBonus #StockSplit #RightsIssue #Buyback #stockmarket

• Basics of Stock Market #1: #Dividends...
Telegram Channel Link: For Financial Education channel to create Financial Awareness among the people and to Guide them in the best possible way
t.me/MoneyMeetsMoney

[@salkutisurenderreddy4477]

Very useful and informative.....

[@masireddysalkuti7752]

Informative video for beginners

[@MoneyMakesMoney86]

Thanks a lot

[@user-vc8gv5nv3t]

Good Information

[@MoneyMakesMoney86]

Thanks

[@SurenderReddyS-qp9qk]

Very useful to understand basics of stock markets 🎉🎉🎉