1.Earnings per share (EPS): EPS tells us how much profits the company is making on per share basis.
2.Price to Earnings Ratio (PE Ratio): Price Earnings ratio is the ratio of company’s current stock price to its earnings per share. It gives us an idea of what the market is willing to pay for company’s earnings. It also indicates how the stock is valued in the market.
3.Revenue Growth : This ratio indicates how fast a company is growing its revenues over a period of time and also the high revenue growth is a very good indication that the company is in a growing phase.
4.Return on Net Worth (RoNW): RoNW tells us what returns a company is generating on its equity part,Higher the RoNW (Return on Net worth) it is better.Companies which are doing very good have high RoNW as compared to its peer group companies.
5.Operating Margin: It is derived by dividing the operating profit by the total revenues.A company with high operating margin is a very good sign.Normally companies which are industry leaders in the business segment it is operating in or Companies which are in Niche business typically tend to have high operating margins.
6.Debt to Equity: Companies take debt to run their business operations and company also has money invested by shareholders which is called Equity.It is better if the company has low debt-to-equity ratio and should avoid companies with High debt-to-equity ratio.
7.EPS Growth: This is a tool related to EPS and tells us the growth of EPS over a period of time. For instance, if the EPS of a company this year has gone up from Rs 10 to Rs 11, the EPS growth is 10 per cent. Good companies show higher earnings growth than their peers in a sector. A shrinking EPS, on the other hand, should ring an alarm.
8.Dividend yield: The profits which the company shares with its shareholders is called Dividends.Dividend yield is calculated by dividing the dividend per share by the stock price.If the Dividend yield is higher than you get more money as dividends.
9. Price to book value ratio (P/B)
This compares the value the market puts on a company with the value the company has stated in its financial books. It’s calculated by dividing the current price per share by the book value per share. The book value is the current equity of a company and most of the time, the lower the P/B is, the better. That’s because you’re paying less for more book value.
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