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Type of Securities Investment Strategies Fundamental Analysis Technical Analysis
Understanding Financial Statements Income Statement Analysis Balance Sheet Analysis Cash Flow Analysis Shareholders' Equity Analysis Ratios and Definitions


Ratios and Definitions

 - Market Price Analysis

 - Profitability Analysis

 - Liquidity Analysis

 - Cash Flow Analysis

 - Capital – Leverage Analysis

 - Activity Analysis


 

 

 


Market Price Analysis
Measures the company’s value

·        Price Earning Ratio – Share price (market price) divided by earnings per common share.

·        Book Value Ratio – Share price divided by book value per share.

·        Dividend Yield – Annual dividend on common shares divided by the share price.

·        Payout Ratio – Annual cash dividend paid, divided by net income less preferred dividends. 

·        Cost of Equity – The risk free interest rate, plus (the market risk premium rate times the individual stock’s beta).

·        Market Capitalization – Shares outstanding times the share price.

·        Enterprise Value – Market capitalization, plus preferred stock, plus interest bearing debt, less cash and cash equivalents

·        Beta – A calculation that measures the volatility of a company’s stock price, against the volatility of stock market indexes.

·        Hurdle Rate – The rate that is needed to be achieved, for an investment to be considered successful, or acceptable. 

 

 

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