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Ratio Analysis

Learn how to calculate and interpret PE, PB, ROE, ROCE, and other key financial ratios to analyse stocks and make better investment decisions.

What is Price to Sales Ratio (PS Ratio)? The Price to Sales (P/S) ratio is a valuation metric that compares a company's stock price to its revenue. It shows how much inves… 5 min read
Best Ways to Use PB Ratio for Banking Stocks in India The best way to use the PB ratio for banking stocks in India is to combine it with Return on Equity (ROE). A low PB ratio suggests… 5 min read
What is Cyclically Adjusted PE Ratio (CAPE)? The Cyclically Adjusted PE Ratio (CAPE), or Shiller P/E, is a stock valuation measure that uses the average of ten years of inflat… 5 min read
What is Enterprise Value to Sales Ratio? The Enterprise Value to Sales ratio compares a company's full takeover cost to its yearly revenue. It is useful for loss-making, c… 5 min read
Best Valuation Ratios Every Stock Investor Must Know The best financial ratio for stock analysis is the Price to Earnings (P/E) ratio because of its simplicity and wide applicability.… 5 min read
Intrinsic Value vs Market Price — How Valuation Ratios Show the Gap Intrinsic value is a company's true worth, based on its fundamentals like earnings and assets. Market price is the current price o… 5 min read
What is ROE (Return on Equity) in Stock Analysis? Return on Equity (ROE) is a key financial ratio that measures a company's profitability by showing how much profit it generates fo… 5 min read
What Causes ROE to Decline Year Over Year Despite Rising Profits? ROE can decline year over year even when profits rise because shareholder equity grew faster than profit. Fresh equity raises, cap… 5 min read
What Happens When a Company's Net Profit Margin Turns Negative? A negative net profit margin means a company spent more than it earned during a period, resulting in a net loss. Investors should … 5 min read
Profitability Ratios for First-Time Stock Investors in India For first-time stock investors in India, the most important profitability ratios are Net Profit Margin, Operating Profit Margin, R… 5 min read
What is Current Ratio and Why Is It Important? The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations due within one year. It's i… 5 min read
What is Working Capital in Ratio Analysis? Working capital is the money a company uses for its day-to-day operations, calculated as current assets minus current liabilities.… 5 min read
What is Net Debt Per Share and How Is It Used? Net Debt Per Share is a financial ratio that shows how much of a company's debt is attributed to a single share of its stock. It i… 5 min read
Pledge Ratio vs Debt-to-Equity — What Is the Difference? The Pledge Ratio reveals the financial health of a company's promoters by showing how many of their shares are used as collateral … 5 min read
Why Is My Stock's Debt-to-Equity Ratio Suddenly Very High? A stock's debt-to-equity ratio can suddenly get very high if the company takes on new loans, or if its shareholder equity shrinks … 5 min read
Leverage and Liquidity Ratios for Long-Term Buy-and-Hold Investors Leverage and liquidity ratios help long-term investors spot financially weak companies before problems appear. The five key ratios… 5 min read
How to Calculate EPS from a Company's Financial Statement Calculate EPS by subtracting preference dividends from net profit, then dividing by the weighted average number of equity shares o… 5 min read
Cash EPS vs Reported EPS — Which Is More Reliable? Cash EPS is more reliable than Reported EPS for capital-heavy businesses because it strips out non-cash charges like depreciation … 5 min read
How to Calculate Dividend Payout Ratio and What It Reveals The Dividend Payout Ratio tells you the percentage of a company's net income it pays out as dividends to shareholders. It helps in… 5 min read
How to Use Efficiency Ratios to Spot Operational Improvements Efficiency ratios measure how well a company uses its assets and liabilities, like inventory or debt, to generate sales. You can u… 5 min read
What Does Negative Free Cash Flow Mean for a Growing Company? Negative free cash flow means a company spent more on operations and investments than it earned in cash. For a growing company, th… 5 min read
Is Free Cash Flow Yield Always Better Than PE Ratio for Valuation? Free Cash Flow (FCF) Yield is often seen as superior to the Price-to-Earnings (P/E) Ratio because it focuses on actual cash, which… 5 min read
What FCF Yield Signals an Attractively Priced Stock? A good Free Cash Flow (FCF) yield is generally above 5%, with yields over 10% often signaling a very attractively priced stock. Th… 5 min read
Efficiency and Growth Ratios for Long-Term Buy-and-Hold Investors Financial ratios for stock analysis in India help long-term investors look beyond simple metrics like P/E. Efficiency ratios like … 5 min read
How to Build a Quality Stock Filter Using Ratio Analysis Building a stock filter involves using financial ratios for stock analysis in India to screen companies based on specific criteria… 5 min read
Why the Same Ratio Means Different Things Across Sectors Financial ratios are not universal benchmarks. A 'good' ratio for a bank, like a high Debt-to-Equity, could be a major red flag fo… 5 min read
How Ratio Analysis Helps You Avoid Fraudulent Companies in India Financial ratios for stock analysis in India can also serve as an early fraud warning system. Track Cash Flow from Operations to N… 5 min read