The Valuation Ratios
Study of The Financial Ratios: The Valuation Ratios
The Valuation ratios compare the stock price of a company to either its overall worth or its ability to make money. This lets you know how cheap or expensive the stock is trading. So, this number helps us figure out if people think the current price of the company's shares is high or low. To put it more simply, the valuation ratio looks at how much protection costs and how much it's worth to own stock.
The valuation ratios help us figure out how people in the market think the price of a stock is worth. From an investment point of view, these factors help us figure out how appealing the stock price is. The goal of valuation measures is to find the best balance between a stock's price and its value. Like the other ratios we looked at, the valuation factors of a company should be compared to those of its rivals.
We will be looking at the following three important valuation ratios:
- Price to Sales (P/S) Ratio
- Price to Book Value (P/BV) Ratio
- Price to Earnings (P/E) Ratio
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Table of Contents: Study of The Financial Ratios 1. Introduction of the Financial Ratios |
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