baccaratgcash| How to use financial ratio analysis of stocks

For investorsBaccaratgcashThe charm of the stock market lies in its potential profit space. However,BaccaratgcashStock investment is not an untraceable adventure, but an art that requires in-depth analysis and understanding. Among the many analysis tools, the financial ratio analysis of stocks is a method commonly used by investors. It can help investors to deeply understand the operating conditions, profitability and growth potential of a company, so as to make more informed investment decisions. Next, we will explore how to use financial ratio analysis to assess the potential value of stocks.

oneBaccaratgcash. Profitability analysis

Profitability is a key indicator of a company's ability to make profits. Investors can be evaluated by two indicators: return on equity (ROE) and net interest rate on sales.

Return on equity (ROE)

The ratio reflects the company's ability to use shareholders' funds to make a profit, and the formula is: ROE = net profit / average shareholder equity. Generally speaking, the higher the ROE, the stronger the company's ability to use capital.

Net profit rate of sales

The net interest rate on sales represents the percentage of net profit in a company's sales income, which is calculated as follows: net profit on sales = net profit / sales income. The higher the ratio, the stronger the profitability of the company to sell products.

twoBaccaratgcash. Operational capability analysis

Operational capability analysis focuses on the efficiency of the use of the company's assets, including asset turnover and inventory turnover.

Asset turnover rate

The asset turnover ratio measures the ability of a company's assets to generate sales income, and the formula is as follows: asset turnover ratio = sales income / average total assets. The high turnover rate of assets shows that companies are more efficient in using assets to earn income.

Inventory turnover

Inventory turnover reflects the company's ability to manage inventory, which is calculated as follows: inventory turnover = cost of sales / average inventory balance. The high inventory turnover rate means that the company has high inventory management efficiency.

3. Debt-paying ability analysis

Solvency analysis focuses on a company's ability to repay debt, which is mainly assessed by current ratios and quick ratios.

Current ratio

The current ratio measures a company's ability to repay debt in the short term, and the formula is: current ratio = current assets / current liabilities. The high liquidity ratio shows that the company has a strong ability to repay debts in the short term.

Quick ratio

The quick ratio is used to measure a company's ability to repay short-term debts quickly without realising fixed assets. The formula is: quick ratio = (current assets-inventory) / current liabilities. The high quick ratio shows that the company has a good short-term solvency.

Examples of using financial ratio analysis

Through the analysis of financial ratio, investors can have a comprehensive understanding of the profitability, operating ability and solvency of the company, so as to evaluate the investment value of stocks. However, it should also be noted that financial ratio analysis is only a part of stock investment analysis, and investors need to make comprehensive investment decisions based on market trends, industry analysis, corporate management and other factors.