Class 2

Class 2 - o Price earnings: Price investors are willing to...

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Ch. 4: Financial Ratios Efficiency ratios: o Turnover ratio: Sales/ assets How much sales are we generating per $ assets? Profitability ratios: o Gross margin: Gross profit/ sales How much profit are we making per $ sales o Operating margin: Operating profit/ sales o Return on equity: What return do I make on my equity investment? NI/ equity Market value ratios: o Address question of how firm’s shares are valued in the stock market
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Unformatted text preview: o Price earnings: Price investors are willing to pay for $ of earnings Market price per share/ earnings per share Higher is better o Market/ book ratio: Market price per share/ (equity/ # shares outstanding) Market price relative to book value Higher is better...
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Class 2 - o Price earnings: Price investors are willing to...

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