Stock Ratio Types
To streamline the analysis procedure, we categorize stock ratios into several groups. This categorization helps investors quickly identify the specific aspect of a company they are evaluating.
What are Stock Ratios?
Stock ratios are mathematical calculations used to analyze a company's financial statements. They provide insights into performance, liquidity, profitability, and valuation.
Types of Ratios
Valuation Ratios
Valuation ratios are used to evaluate the share price of a company. They help determine if a stock is overvalued (expensive) or undervalued (cheap) compared to its peers or historical average.
Profitability Ratios
Profitability ratios evaluate a company's ability to generate profit from its operations relative to its revenue, assets, or equity.
Growth Rate Ratios
Growth rate ratios measure the growth of a company's earnings, sales, or other metrics over a specific period.
Financial Strength Ratios
Financial strength ratios help investors assess the long-term stability and financial health of a company, focusing on debt and equity.
Management Effectiveness Ratios
These ratios measure how effectively management uses company resources (assets, equity, etc.) to generate returns.
Liquidity Ratios
Liquidity ratios measure a company's ability to pay off its short-term debts and obligations.