Asset turnover ratio (ATR) measures the company’s ability to generate sales or turnover relative to the value of assets. It is used as a financial indicator by analysts to take an investing decision. Higher asset turnover ratio indicates that the management is more efficient in generating revenue from its assets. In contrast, a low ATR indicates inefficiency of the … [Read more...] about How to calculate asset turnover ratio
Finance
Profitability ratios: How to calculate and What do they tell you?
Profitability ratios are used by financial analysts to assess a company’s ability to generate earnings relative to its revenues for a period. It signals how efficiently the company has managed to generate profit and value for its shareholders. Company’s ability to generate profits on capital invested is the most important factor in order to find out its value and the … [Read more...] about Profitability ratios: How to calculate and What do they tell you?
What is dynamic support and resistance levels in stock market
The most basic tendency of traders is to buy a stock at a price level that they consider is very low and to sell a stock at a price that they consider is relatively high. When the majority of traders believe that price is relatively low, buying pressure overtakes the selling pressure and the price generally goes up. Likewise, when a majority of traders believe that a … [Read more...] about What is dynamic support and resistance levels in stock market
How to calculate solvency ratios and measure financial leverage of a company
Solvency ratio measures the company’s ability to pay its long term debt obligations. Solvency ratio provides information related to the adequacy of cash flow and earnings to cover interest, other fixed costs and principal payments as they come due. In other words, solvency ratio measures the size of a company’s profitability and compares it to its obligations to assess the … [Read more...] about How to calculate solvency ratios and measure financial leverage of a company
How net profit margin is used to analyse companies profitability
Net profit margin is calculated to know how much net income or profit is generated by the company as a percentage of revenue for a period. It's part of profitability ratios used by financial analysts to analyse a company’s income statement. You can present net profit margin in decimal form instead of showing as a percentage of revenue. If a financial analyst wants to know … [Read more...] about How net profit margin is used to analyse companies profitability
Bottom-Line vs. Top-Line: What’s the Difference?
On the company's income statement, top line and bottom line are the two most important lines that investors and analysts pay particular attention to. Income statement is one of the three most important financial statements reported by the company to let the stakeholders know the company's financial performance over a specific accounting period, which is typically for a … [Read more...] about Bottom-Line vs. Top-Line: What’s the Difference?
Relative price strength: How a stock is performing
Relative price strength (RPS) is a strategy used in technical analysis in identifying value stocks. RPS is also known as relative strength. In relative strength strategy, market participants compare the price trend of a stock in comparison to the price trend of the market or other stocks. In other words, they compare performance of two securities, or a security and an index, … [Read more...] about Relative price strength: How a stock is performing
Price to Sales Ratio: Is it the king of the value factors
In one of our earlier articles, we have discussed the price to earnings ratio, which is popularly known as P/E ratio or P/E multiple. In this article, we will tell you how to calculate price to sales ratio, and whether it is considered as the king of the value factors. The price to sales ratio is used as a profitability analysis tool to discover undervalued and overvalued … [Read more...] about Price to Sales Ratio: Is it the king of the value factors
How to pledge your shares to increase margin limit
If you have purchased a few shares after selling your position on the same day, then in the absence of adequate funds, your broker might ask you to pledge shares. They will initiate a request to pledge shares or provide adequate funds. You will receive a link from the depositories (CDSL/NSDL) to authenticate the request on your registered email ID and SMS on the … [Read more...] about How to pledge your shares to increase margin limit
How does supply and demand affect stocks
Cause and effect analysis is one of the oldest ways to analyse What causes prices to move? If you understand the cause then only it will be easier to understand the reality of the stock market. Supply and Demand is the main cause why the share market moves up and down. Professional technical analysts suggest that a better way to trade is to understand the cause of price … [Read more...] about How does supply and demand affect stocks