Financial Ratios and Metrics
Financial ratios and metrics There are numerous financial ratios and metrics used by investors to assess the financial health, performance, and valuation of a company. Here are some essential ratios and metrics commonly used in investment analysis: Price-to-Earnings Ratio (P/E): Formula: P/E ratio = Market Price per Share Earnings per Share (EPS) P/E ratio = Earnings per Share (EPS) Market Price per Share Interpretation: Indicates how much investors are willing to pay for each dollar of earnings. A higher P/E ratio may suggest higher expectations for future earnings growth. Earnings Per Share (EPS): Formula: EPS = Net Income Weighted Average Number of Shares Outstanding EPS = Weighted Average Number of Shares Outstanding Net Income Interpretation: Represents the portion of a company's profit allocated to each outstanding share of common stock. Ret...