Here are all the Financial Ratios you will need to evaluate a company -

Financial Ratios Covered ⬇️
- P/E
- P/B
- Current Ratio
- Quick Ratio
- ROCE
- ROE
- D/E
- P/S
- PEG
- Price-to-Cash Flow (P/CF)
⚡ & many more 😄

Here is the Thread🧵⬇️

1. Price-To-Earnings (P/E)

▪︎Most Widely Used Metric
▪︎High P/E ratio means either the company is overvalued or is on a trajectory to growth
▪︎Low P/E ratio indicates either the company is undervalued or soon the profits will disappear.

2. Price-To-Book (P/B) -

Book Value = Total Assets - Total Liabilities

▪︎It's useful to evaluate companies with large tangible assets in their balance sheets.
▪︎It's a good Metric to Evaluate Bank Stocks but less useful for Service & IT Stocks.

3. Current Ratio
= Current Assets/Current Liabilities

▪︎A higher ratio often indicates greater liquidity and more stability.
▪︎It helps us gauge the short-term financial strength of a company.
▪︎The current ratio gives an idea of a company’s operating cycle.

4. Quick Ratio -

▪︎A Liquidity crisis can arive even at healthy companies that's why I prefer Quick Ratio over Current Ratio because it's more conservative.
▪︎It excludes inventory & other current assets, which are generally more difficult to turn into cash.