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ET Home Wealth Invest Search for News, Stock Quotes & NAV's
Most of you would have already received the balance sheets of companies you are
invested in.
ET Wealth explains how to compute a few useful ratios from the available data.
VALUATION
PBV RATIO
The formula: Share price/book value per share (or market cap net worth)
Useful for: All sectors, particularly for banking where assets (i.e. loans) are close to Big Change:
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market value.
EFFICIENCY
http://economictimes.indiatimes.com/wealth/invest/useful-ratios-to-know-in-the-balance-sheet-of-a-company/printarticle/59606017.cms 1/4
8/3/2017 Useful ratios to know in the balance sheet of a company - The Economic Times
Useful for: Most manufacturing sectors that have large supply chains.
Most auto companies are managing inventory well (Inventory turnover (times))
Hero MotoCorp: 46.41
Bajaj Auto: 31.90
Mahindra & Mahindra: 17.43
Useful for: Most manufacturing sectors that have large supply chains.
FINANCIAL STRENGTH
Current ratio
The formula: Current assets / Current liabilities
Useful for: Most manufacturing sectors that have large supply chain on both sides.
http://economictimes.indiatimes.com/wealth/invest/useful-ratios-to-know-in-the-balance-sheet-of-a-company/printarticle/59606017.cms 2/4
8/3/2017 Useful ratios to know in the balance sheet of a company - The Economic Times
Infosys: 4.05
Wipro: 3.50
Debt-Equity ratio
The formula: Long-term debt / Net worth (or shareholders equity)
PROFITABILITY
http://economictimes.indiatimes.com/wealth/invest/useful-ratios-to-know-in-the-balance-sheet-of-a-company/printarticle/59606017.cms 3/4
8/3/2017 Useful ratios to know in the balance sheet of a company - The Economic Times
Source: ETIG Database; Data based on BSE 100 companies whose balance sheet of 2016-17 available
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Copyright 2017 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service
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