Valuation Ratios For Investors

P/E Ratio

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P/B RATIO

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PEG RATIO

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EV/EBITDA

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P/S RATIO

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DIVIDEND YIELD

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DIVIDEND PAYOUT

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Valuation Ratios For Investors

P/E Ratio

Price to earnings ratio is calculated by P/E ratio = (Market Price per share/ Earnings per share). PE ratio value varies from industry to industry.

P/B RATIO

Price to book value (P/B ratio can be calculated using this formula: P/B ratio (Market price per share/ book value per share) As a thumb rule, a company with lower P/B ratio is undervalued compared to the companies with higher P/B ratio.

PEG RATIO

Price/Earnings to growth ratio can be calculated using this formula. PEG ratio = (PE ratio/ Projected annual growth in earnings) This ratio is considered to be more useful than PE ratio as PE ratio completely ignores the company growth rate.

EV/EBITDA

EV/EBITDA is a good valuation tool for companies with lots of debts. Here, EV = (Market capitalization + debt-Cash) & EBITDA - Earnings before interest tax depreciation amortization

P/S RATIO

The stock's price/sales ratio (P/S) ratio measures the price of a company's stock against its annual sales. It can be calculated using the formula: P/S ratio = (Price per share/ Annual sales per share)

DIVIDEND YIELD

Dividends are the profits that the company shares with its shareholders as decided by the hoard of directors Dividend yield can be calculated as: Dividend yield = (Dividend per share/ price per share)

DIVIDEND PAYOUT

Dividend payout tells you the percentage of the profit distributed as dividend It can be calculated as: Dividend payout = (Dividend/net income)

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