Licenciatura en Negocios

Internacionales, Bilingüe

8 Important Financial Ratios To Know When Analyzing a

Stock
English Activities

Contabilidad y Estados Financieros

 Earning Per Share (EPS)
This number tells you how much a company earns in
profit for each outstanding share of stock. EPS is
calculated by dividing a company’s net income by the
total number of shares outstanding.

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Quick Ratio Price/Earning Ratio (P/E)
Also known as the acid test, the This is a valuation ratio,
quick ratio measures whether a meaning it’s used by investors to

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company can meet its short- determine how much value
term obligations with assets that they’re getting relative to what
can quickly be converted into they’re paying for a share of
cash. stock.

Operating Margin Return On Equity (ROE)

Financial
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Operating margin is a way of It’s a measure of how good a
measuring the profitability of a company is at turning its

Ratios
business’ core operations. It’s shareholders’ money into more
calculated by dividing operating money. In its simplest form,
profit by total revenues and return on equity is calculated by
shows how much income is BY FRIDA CORRAL dividing a company’s net income
generated by each dollar of by its shareholder equity.
sales.

Enterprise Value to EBIT

The enterprise value to EBIT ratio 6 4 Debt-To-Capital Ratio
One way to look at this is the

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is essentially a more advanced debt-to-capital ratio, which adds
version of the P/E ratio. short- and long-term debt, and
Enterprise value can be divides it by the company’s total
calculated by adding a capital.
company’s interest-bearing The higher the ratio is, the more
debt, net of cash, to its market a company is indebted. In
capitalization, which is the total general, debt-to-capital ratios
value of all its outstanding stock. Interest Coverage Ratio (ICR) above 40 percent warrant a
closer look to make sure the
This number tells you the extent to which earnings company can handle the debt
cover interest payments owed to bondholders. The load.
higher the ratio, the more coverage the company has
for its debt payments.
Cfa, B. B. (2023, 31 agosto). 8 Important financial ratios to know when analyzing a stock.

Bankrate. https://www.bankrate.com/investing/important-financial-ratios/