Overview of Investment Indicators Used
In this website, you will see some financial terms or ratios which we use quite often. Click on the below links to see what we mean.
Market Value Indicators
Market Capitalization
Enterprise Value
Net Tangible Assets
Valuation Indicators
PE Ratio
EV / EBIT (or EBIT Multiple)
Forward Earnings & PEG Ratio
Dividend Yield
Financial Strength Indicators
Net Cash
Gearing
Interest Cover
Efficiency Indicators
Capital Employed
Return on Equity
Return on Capital Employed
Other Useful Indicators
EBIT Margin
Tax Expense / PBT
These indicators when considered together will provide you with an idea of whether a company is cheap or expensive. Generally we consider a company cheap if it trades at low earnings multiple and has a low risk profile. In this website we use the concept of:
PE Ratio
EV / EBIT (EBIT Multiple)
Dividend Yield
as indicators of earnings multiple.
Risk in itself can be a complex concept but in this website we only look at it in terms of gearing (or borrowing level). At a broader level, risk can also encompass share price volatility, business risks, market risks and systematic risk (overall stock market risk). We do not dwell into these areas.
There are many was to define risk. In fact Warren Buffett thinks of risk in terms of the share price. The lower the share price, the lower your risk….simple but profound and true.
10.23 (0.78%)
6.000 (0.12%)
September 5th, 2009 at 11:40 pm
since banks are different from other companies, are these indicators applicable to banks as well?
September 6th, 2009 at 11:20 am
PE Ratio, PEG, Div Yield, Market Cap, NTA, Return on Equity & Tax Expense / PBT would apply similarly to banks. The others are not applicable. A bank’s strength is not gauged so much by Cash Flow & Gearing but by its Tier 1 Capital Ratio and Loan-Deposit Ratio.
For ease of calculation, we have used Net Assets / Total Assets as an indicator which is quite similar to the banks “Tier 1 Capital”, the main difference being that Tier 1 Capital excludes certain Intangible Assets.
September 15th, 2009 at 2:34 pm
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thank you
Zul