Friday, April 29, 2016

What is a forward P/E ratio?

Forward P/E Ratio = Stock Price/Estimated earnings per share. This compares to the P/E ratio which is based on known earnings per share.

Thursday, April 28, 2016

What is a dividend?

A dividend is the amount of cash that a shareholder receives from a company. Dividends are typically paid in quarterly. Some companies like to pay on a monthly, semi-annual and annual basis.

Wednesday, April 27, 2016

What is return on equity?

Return on equity (ROE) is defined by the following formula—(Net Income/Stockholder’s equity) x 100. Sometimes investors use this formula—(Net Income/Average Stockholder’s equity) x 100. I like to see companies with ROE of 12% or more.

Tuesday, April 26, 2016

What is long-term debt to equity?

Long-term debt is defined by the following formula: (Long-term debt/Stockholder’s equity) x 100. I like to see companies with long-term debt amounting to 50% or less of stockholder’s equity.

Monday, April 25, 2016

What is cash to stockholder’s equity?

I like to use a measure called cash to stockholder’s equity defined as (Cash/Stockholder’s Equity) x 100. I like to see companies hold cash amounting to 20% or more of stockholder’s equity to get them through tough times, expand, pay dividends, etc.

Friday, April 22, 2016

What is profit margin?

Profit Margin = (Net Income/Revenue) x 100. Investors desire this percentage to stay steady or increase over time.

Thursday, April 21, 2016

What is operating margin?

Operating Margin = (Operating income/Revenue) x 100. You would want this percentage to stay steady or increase over time. Moreover, I prefer that operating income exceeds interest expense by five times.

Wednesday, April 20, 2016

What is gross margin?

Gross margin = (Gross profit/revenue) x 100. Investors want to see this percentage stay steady or go up over the long term.

Tuesday, April 19, 2016

What is current ratio?

Current ratio = Current Assets/ Current Liabilities. I like to see 2 or more on this measure.

Monday, April 18, 2016

What is times interest earned?

Times interest earned = operating income/ interest expense. Five or greater is considered a good conservative ratio.

Friday, April 15, 2016

What are unrealized gains?

Unrealized gains represent the increase in the value of your stock on paper. These gains don’t become cash unless you sell your holdings and then it becomes realized gains.

Thursday, April 14, 2016

What is dividend yield?

Dividend Yield = [Annual dividend per share/Stock price per share] x 100

Wednesday, April 13, 2016

What are earnings per share?

Earnings per share (EPS) = Net Income/Shares Outstanding

Tuesday, April 12, 2016

What is a P/E ratio?

P/E Ratio = Stock Price/Earnings per Share

Monday, April 11, 2016

The Coin Jar

Pennies add up to dollars. Throwing change into a jar is better than not saving anything at all. It can actually add up to a somewhat decent amount over time.

Thursday, April 7, 2016

Cash is King in Investing

Remember to always keep enough cash (above and beyond your emergency fund) to take advantage of any opportunity provided by stock market corrections. Stock market corrections mean you can buy quality companies on the cheap.

Wednesday, April 6, 2016

Have you done your research?

Before investing in anything you should do your research. You may be investing in a proverbial lemon that could cost you your investment.

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Tuesday, April 5, 2016

Stock Price Corrections are Good

Lower stock prices means long-term investors can pick up shares of good companies on the cheap.

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Monday, April 4, 2016

Have you thought about earmarking your money?

Not all dollars are the same. Some money gets allocated to various outlays such as utilities, recreation and investing.

Friday, April 1, 2016

Have you thought about your stock’s valuation?

The chances of getting a good return on your investment depend not only on the business viability of the company behind your stock but paying a good price. One simple way to determine whether or not your stock is cheap is looking at the company’s P/E ratio. Buying shares in a company backed by solid fundamentals with a low P/E ratio could improve your total return over the long-term.

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