06. Ratios
L1 07 Ratios V2
Ratios (Fundamentals)
Price to earnings ratio: the stock price divided by the company’s earnings per share over the past four quarters.
Price to sales ratio: the the stock price divided by the sales per share over the past four quarters.
Price to book ratio: the stock price divided by the book value per share.
The book value is the company’s accounting value, which is assets minus liabilities
Growth stocks tend to have high price to earnings, price to sales, and price to book ratios.
Value stocks tend to have lower price to earnings, price to sales, and price to book ratios.