Market Ratios Overview

This set of flashcards covers key terms and definitions related to market ratios, including calculations for EPS, P/E ratio, market capitalization, and market to book ratio.

EPS (Earnings Per Share)

A measure of a company's profitability, calculated as net income divided by the total number of outstanding common shares.

P/E Ratio (Price-to-Earnings Ratio)

A valuation ratio calculated by dividing the market price per share by the earnings per share, indicating how much investors are willing to pay for a company's earnings.

Market Capitalization

The total value of a company's outstanding shares of stock, calculated by multiplying the current stock price by the total number of shares issued.

Market to Book Ratio

A financial ratio comparing a company's market value to its book value; >1 indicates long-term growth potential and <1 indicates long-term decline.

Profitability

The ability of a company to generate profit relative to its revenue, assets, or equity.

Growth Potential

The possibility for a company's earnings to increase over time, indicating future financial success.

Investor Scale

A measure of the scale or size of a company's market presence and investor interest.

Negative P/E Ratio

Indicates that a company is currently operating at a net loss.

Market Value

The total monetary value of a company's shares on the stock market.

Book Value (Shareholders' Equity)

The net asset value of a company, calculated as total assets minus total liabilities.