About the Video
Here are 5 financial ratios that any beginner investor needs to know!
🔴 𝗦𝘁𝗮𝗿𝘁 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗜𝗕𝗞𝗥 ➡️ https://www.interactivebrokers.com/mk...
⬇️Timestamps:
0:00 → Introduction
0:32 → (1) Earnings Per Share (EPS) Ratio
4:31 → (2) Price to Earnings (P/E) Ratio
7:37 → (3) Debt to Equity (D/E) Ratio
10:48 → (4) Return on Equity (ROE) Ratio
12:44 → (5) Quick Ratio
15:28 → Conclusion
Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company. The numbers found on a company’s financial statements – balance sheet, income statement, and cash flow statement – are used to perform quantitative analysis and assess a company’s liquidity, leverage, growth, margins, profitability, rates of return, valuation, and more.
Analysis of financial ratios serve to track company performance. Determining individual financial ratios per period and tracking the change in their values over time is done to spot trends that may be developing in a company. For example, an increasing debt-to-asset ratio may indicate that a company is overburdened with debt and may eventually be facing default risk.
Other than that, such analysis allows you to make comparative judgments regarding a company’s performance. Comparing financial ratios with that of major competitors is done to identify whether a company is performing better or worse than the industry average. For example, comparing the Return on Equity between companies helps an analyst or investor to determine which company is making the most efficient use of its shareholders’ equity.
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