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.
Friday, April 29, 2016
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
Wednesday, April 13, 2016
Tuesday, April 12, 2016
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.
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.
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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