Investing Basics: Key Metrics
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These flashcards cover definitions and formulas for stock price, market capitalization, and the P/E ratio—essential metrics for evaluating a company before investing.
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5 Terms
What are the three primary factors to evaluate when investing in a company?
Stock price, market capitalization, and price-to-earnings (P/E) ratio.
How is a company’s market capitalization calculated?
By multiplying the share price by the total number of shares outstanding.
What is the formula for the price-to-earnings (P/E) ratio?
Share price divided by annual earnings per share.
Which metric represents the total market value of all a company’s outstanding shares?
Market capitalization.
What does a company’s stock price indicate?
The current market price at which a single share of the company trades.
Flashcards (25)