List of Important Financial Ratios for Stock Analysis

When you're research individual stocks for investing, you have to look beyond the basics like share price, number or shares, and market capitalization. Here are some important financial ratios to help you better understand the company you are about to invest in.

Common Investment Valuation Ratios

The Liquidity Ratios

Liquidity of a company is an important indicator of its health. It measures the ability of a company to convert its assets into cash quickly without any price compromise. Here are a few ratios to look at when measuring liquidity:

Profitability

In general, you want to invest in companies that are profitable. Here are a few ratios to look at when measuring profitability:

Debt

Some debt is good, but too much debt could be bad. In general, you want to invest in companies that can manage its debt well and can effectively leverage debt to its advantage. Here are a few ratios to look at:

Productivity

You also want to look at how well the company utilizes its resources. Here are a few ratios to look at:

Cash Flow

You probably have heard this before: "Cash Flow is King." In business, you want to invest in companies with good cash flow. Here are a few ratios to look at:When investing in individual stocks, there are a lot of information to consider when doing your due diligence. Understanding these ratios can help you better understand the  company you are looking at and how it compares to its peer group.
By InvestorGuide Staff

Copyrighted 2016. Content published with author's permission.

Posted in ...