mercy87:


Good morning. What's bastardson?

it's a name of a monicker here on NL

Why una just dey mention Person name.. My ear just dey sound somehow all day.

Following now

Yes, it is good that before you start any business you are supposed to know the price to sales ratio formula, which will help you to know how much you are supposed to start with and how much are you going to sell your product.

Prepare for US recession

Be saving now to buy more

Cherry picking will be allowed

Buy buy buy with 2025 in mind

Keep DCAing

gamaliel9:
Keep DCAing

Hi!

I am new to buying of US shares. I went through your thread when you started and all that. I really learnt a lot.

I have registered on Chaka and waiting for confirmation.

Been reading about the economic challenges in the US. I don’t know if this is the right time to buy as I am a novice willing to learn.

Thanks

Hamachi:
What are 3 most important financial ratios we should study before investing in stocks?
What are the best ratios to look for when buying a stock?
I found an interesting article by John Dobosz (forbes stuff) which will give the answer to your question! Here are ten financial ratios that can tell you most of what you need to know when you’re scouring the market for good stocks to buy.

1. Price-Earnings Ratio (P/E): This number tells you how many years worth of profits you’re paying for a stock and you calculate it by dividing the stock price by earnings per share. All things equal, the lower the P/E the better. The most frequently used earnings number in the calculation is the total earnings per share over the past four reported quarters. You could also use “forward” earnings, which is the average of Wall Street’s forecasts for the current fiscal year.

2. Price/Earnings Growth (PEG) Ratio: The PEG ratio is another Benjamin Graham invention which attempts to measure the degree of a discount or premium you’re paying for growth. The calculation is to divide the P/E ratio by the long-term annualized percentage growth rate of earnings, ideally the next five years’ worth. A result of less than 1.0 implies that the market is not fully valuing the prospects for future growth.

3. Price-to-Sales (P/S): Similar to the P/E ratio, the price-sales ratio divides that market capitalization of a stock by total sales over the past 12 months, instead of earnings. Popularized by investment manager and longtime Forbes columnist, Ken Fisher, the price-sales ratio tells you how much you are paying for every dollar in annual sales.

4. Price/Cash Flow (P/CF): This useful measure of value is obtained by dividing the market value by operating cash flow over the prior 12 months. It strips out items like amortization and depreciation from earnings and focuses on cash generated by the business. This provides a better way than P/E for comparing valuations of companies from different countries that have different depreciation rules that can affect earnings.

5. Price-To-Book Value (P/BV): This ratio tells you how much you’re paying for every dollar of assets owned by the company, and you calculate it by dividing the market capitalization by the difference between total assets and total liabilities. The idea is to approximate how much money you could put your hands on if you shut down the business and sold off everything. As with most price multiple metrics, price-to-book is best used by comparing present multiples to historical averages.

6. Debt-to-Equity Ratio: The fundamental accounting equation tells you that assets equal liabilities plus equity. The debt-equity ratio is a measure of financial leverage telling you the percentage of a company’s assets financed by debt. The formula is to divide total debt (or just long-term debt) by shareholder’s equity, two items both found on the balance sheet. Off-balance sheet items like pension obligations should also be treated as debt.

7. Return On Equity: ROE measures a company’s efficiency at generating profits from money invested in the company, and it is derived by dividing by net income by shareholder’s equity. It’s a very handy measure of management’s effectiveness but it’s not useful for ascertaining value of early-stage companies that do not produce profits. For example, Tesla Motors (TSLA) has a -115% return on equity.

8. Return On Assets: Similar to return on equity, return on assets is a measure of management effectiveness obtained by dividing net income by total assets. A company with a higher ROA is usually preferable to one with a lower ROA, since it shows the ability to grow profits more efficiently from a given base of assets.

9. Profit Margin: Rising sales are great but they’re not so wonderful if they come at the expense of profit. Profit margin shows how much a company earns from each dollar of sales and is arrived at by dividing profit by sales. The number you get depends on the kind of profit you choose. Gross profit, which is sales minus cost of sales, is the simplest measure. Operating profit is gross profit less overhead items, and net profit (income) is what’s left after paying taxes.

10. Dividend Payout Ratio: If you are looking for yield from your equities, a fat dividend yield can appear quite enticing, especially in a low interest rate environment. The danger of a high yield is that it can be unsustainable, and when it’s eventually cut, you not only lose out on the income but the share price will often take a hit.

Good luck!

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