Stock Analysis Ratios

September 1, 2010

Stock analysis across multiple stocks is much simpler if you take advantage of the insight you can glean from a collection of stock market ratios such as earnings per share, price earnings, dividend yield, and debt to asset ratio.  The performance and market conditions for each company behind shares of stock you’re comparing will vary, making it harder to evaluate the companies all on the same criteria.

That’s where financial ratios come into the picture; they can help you understand where companies stand relative to one another in terms of cash flow, debt, earnings, and other important financial metrics. Once you understand what these ratios represent, you can setup stock screens on the various ratios to help you find stocks of companies that meet the specific criteria that are important to your investing strategy.  Most online brokers allow you to setup stock screens to help monitor these ratios.

A while back we ran a series of posts covering some of the most widely used stock analysis ratios, below are links to each of the articles.  Each one describes what the financial ratios represent and how you can use them to analyze a stock.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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2 Responses to Stock Analysis Ratios

  • Tony DePasquale

    What most of these “experts” do not tell you is that attempting to predict stock price fluctuations is impossible. You may be right occassionally, but you are purely speculating. The best way to truly invest is to follow modern portfolio theory, the efficient market theory and invest for the long term.

    Tony DePasquale


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