Market value ratios With Formula And Use

The market value ratios are used for the evaluation of the current share price of publicly held company stock. It will help us to evaluate the economic status of the traded companies. They play a role in identifying the stocks that may be overvalued and undervalued. There is a variety of market value ratios available. So each of the measures are used in a different way and combined as they offer a financial portrait of publicly traded companies value ration are used to analyze stock trends. The factors include a range of ratios by making a decision of investment. The stock with one great-looking measure could be an undiscovered gem. The earnings per share measure a company income per share of outstanding stock.

To calculate earnings per share is divided by the company's net income by the number of outstanding shares. The book value is company equity is divided by the shares outstanding in the market. It is the market value of the company divided by the total number of outstanding shares. These are the financial metrics are used to evaluate the stock worth of publicly traded companies. These ratios are used by investors to check the prevailing market share prices are in sync with the company's performance. There are different market value ratios used by the share market investors with used ratios.

Formula

1) Price/Earnings/PE Ratio equal to Price per share / Earnings per share.

2) Earnings per Share is equal to Net profit / total number of shares outstanding in the market

3) Cash Earnings per Share is equal to Net Profit + Non-cash items / outstanding shares in the market.

4) Book Value per Share equal to (Shareholder’s Equity – Preference stock) / outstanding numbers of shares.

5) Market Value per Share equal to Market Capitalization / Outstanding shares in the market.

6) The dividend yield is equal to the total dividend paid in a year / Number of shares outstanding

7) Market to book ratio is equal to the Price of one share / Book value of one share.

Use

They give an insight to the investor about the price of the shares, financial and efficiency of the company. They will help in the analysis of the future prospect of the company. Also requires analyzing the different trends in the stock market. They find out the undervalued shares that have high potential to earn money in the future.

Conclusion

They are very critical and useful for all sorts of stock investing. It is secondary market investments as an investment in a company with a minor or major stakeholder. There are different market value ratios that provide different insights into the company and investors that decide investment and strategies using these ratios.

Intense

Market value ratios

Formula

Use

Conclusion

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