Forgot your password?
Stock Market Basics
Stock market basics aren’t difficult to understand and the tools for finding great stocks are available to everyone – if one is prepared to invest enough time, work hard, and be disciplined about it.
Understanding Return on Assets (ROA)Think of Return on Assets (ROA) as a measure of efficiency. Companies with high ROAs are better at sweating Assets for higher Profits. |
Understanding Return on Equity (ROE)Return on equity measures how good a company is at earning a decent return on shareholders’ money. Think of it as measuring profits per dollar of shareholders’ capital. |
Understanding Return on Invested Capital (ROIC)Return on Invested Capital (ROIC) is overall a better measure of profitability. ROIC removes the debt related distortion that can make highly leveraged companies look very profitable when using ROE. |
Understanding Free cash flow (FCF)Free Cash Flow enables us to separate out businesses that are net users of Capital - ones that spend more than they take in- from businesses that are net producers of Capital |
Understanding Discounted cash flow (DCF) | DCF valuationDiscounted cash flow (DCF) valuation is used to evaluate the investment-worthiness of a stock. If DCF valuation is higher than current market price, the opportunity might be worth considering. |
Intrinsic Value -Stock Valuation basicsLearn how we can go about calculating Intrinsic Value - or what a stock is really worth! Without knowing what a stock is worth, how can you know how much you should pay for it? |
Understanding Financial LeverageFinancial Leverage is essentially a measure of how much debt a company carries, relative to shareholders' equity |
Understanding Debt to Equity ratioDebt to Equity ratio is just what it sounds like - long-term debt divided by Shareholders' equity. |
Understanding Times Interest EarnedTimes Interest earned (also known as Interest Coverage) is a measure of a company's ability to meet its debt obligations. |
Understanding Current RatioCurrent Ratio simply tells you how much liquidity a firm has –in other words, how much cash it could raise if it absolutely had to pay off its liabilities all at once. |
Understanding Quick RatioQuick Ratio is a more conservative measure of a firm's short-term liquidity than Current Ratio. It is especially useful for analysing manufacturing firms and retailers. |
Understanding and using PE ratioThe PE ratio is the most commonly used stock valuation measure. It compares the price of a share to the company's earnings per share (EPS) |
Understanding Price to Sales ratioThe Price to Sales ratio (P/S) is useful for quickly valuing companies with highly variable earnings, by comparing the current P/S ratio with historical P/S ratios |
Understanding Price to Book ratioAlthough Price to book ratio (P/B) still has some utility today, the world has changed since Ben Graham’s day. Find out how to use P/B as a valuation measure for today’s markets. |
Understanding Dividend YieldDividend yield is an easy way to compare the relative attractiveness of dividend-paying stocks. It tells us the return we can expect by purchasing a stock vis-à-vis bonds, FDs, etc. |
Understanding Earnings YieldThe nice thing about Earnings Yield, as opposed to P/E, is that we can compare it with alternative investments such as fixed deposits, to see what kind of a return we can expect from an investment. |
Understanding Cash Return ratioThe best yield-based valuation measure is a relatively little-known metric called Cash Return ratio. In many ways it’s actually a more useful tool than the P/E. |
