Top 10 Financial Ratios to use Before Buying a Stock

Описание: Maybe you are a beginner and you want to become the Wolf of Wall Street: We have identified the 10 most important financial ratios, which we use before making any stock purchase. Ratios paint a quick snapshot of the quantitative health of a company. An investor should then supplement this with a qualitative scan.

Here is a list of the 10 ratios featured in the video:
10) 00:20 - Operating margin: Before making a purchase consider a company's efficiency.
9) 01:15 - Interest coverage ratio: How easily can a firm cover their interest costs with operating profits
8) 02:10 - Debt to Equity: You may want to consider future risk in case there is a downturn in the economy
7) 03:00 - EV to EBITDA: Our first valuation ratio, EV to EBITDA is a nice way to filter out some stocks.
6) 05:28 - PE Ratio: This is probably the first ratio you learned, it is pretty important for a valuation
5) 06:30 - Reinvestment Rate: I bet you have never seen this one! Consider this idea before making a purchase
4) 07:50 - Earnings Per Share (EPS): A simple one but it is included so you think of a stock as a business not just a ticker symbol
3) 08:30 - Organic Revenue: You need to be skeptical of management's that are always just acquiring companies and promising synergies
2) 09:10 - Organic Operating Income: The same logic as above
1) 09:37 - Return on Invested Capital: ROIC is a great ratio as it is hard to game. It is also impressive to earn strong returns on what the people funding the business want. You could also substitute tangible capital for equity.

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Disclaimer: We are not financial advisers, and nothing on this channel is meant to be financial advice. The ideas expressed on this channel are purely opinions and should not be regarded as objective information. Nothing on this channel is a recommendation to buy or sell securities. Do not assume that facts and numbers in any video are accurate. Always do your own due diligence.