Ratio Analysis

  

Categories: Metrics, Stocks, Bonds

The devil (and the financial value a lot o' times) lives in the details. You find 'em in the metrics, and they fly all over the place on The Street (Wall, not Sesame).

Some key thoughts: what was the growth rate of revenues year over year, quarter over quarter...and was their seasonality? What were profit margins (gross, operating, and net) this year compared with last and last and last? What volume of product units were sold? What market share do they have today versus last year versus last?

Yeah, so those are a handful of key metrics. A ton more exist that investors track and spend enormous time...analyzing.

Related or Semi-related Video

Finance: What is the Acid Test Ratio/Qui...14 Views

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finance a la shmoop - what is the acid test ratio or the quick ratio quick how

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liquid are we now the quick ratio is a measure of how well or not so well a [Water coming out of a tap]

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company is positioned to be able to quickly pay off the bills that it owes

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aka its liabilities... why the quickly in there because the assets used to pay off

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the liabilities need to be quickly available assets like cash or bank CD's

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or publicly traded stocks or bills the company will collect the next ninety [Assets appear]

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days or so from people likely to pay them well the company likely owns other

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assets like a tractor smelting company but like is it really gonna sell that [Internet mouse cursor clicks search bar]

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smelter to then pay off its bill to U.S steel for steel....Ok well the actual ratio

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looks like this cash plus sellable securities plus money people owe the

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company divided by liabilities so basically the quick ratio compares your

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total liquid assets to how much you owe and it's important to note that you [Forklift drops inventory on factory floor]

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don't count your current inventory as part of your assets as it's typically

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hard to sell everything you have right at this moment and then not at some huge

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discount the higher the quick ratio the healthier the liquidity position of the

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company another good way to test your liquidity well stand in front of a [Man showering]

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radiator and see how quickly you evaporate [Girl stood by a radiator and begins to melt]

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