Images: Shutterstock
Numbers never lie. Successful investors do not just follow the hype, they check key financial numbers. Here are 5 metrics smart investors always monitor!
The price-to-earnings or P/E ratio shows how much investors are willing to pay for each ₹1 of a company’s earnings. A high P/E suggests high growth expectations from the company.
The debt-to-equity or D/E ratio measures how much debt a company has compared to its shareholders' equity. A D/E ratio higher than 1 indicates that the company has more debt than equity.
Return on equity (ROE) measures how efficiently a company uses shareholders' money to generate profit. A higher ROE means the company is good at turning investments into earnings.
Free cash flow (FCF) is the money a company has left after paying all expenses, including operating costs. It shows whether the company has enough cash to invest in expansion and to repay shareholders.
Institutional holdings refer to the percentage of a company’s shares owned by large investors like mutual funds and pension funds. High institutional holdings signifies a huge confidence in the company’s future.
Thanks for reading!
See next