Understanding Valuation Ratios

This ratio shows the relation between the company's market value or its equity and some financials of the company.

The main motive of valuation ratio is to indicate that the price of a particular stock is cheap or expensive when it compares to a certain measure ( like earnings, sales, book value )

A valuation ratio is used by investors to evaluate the attractiveness of a potential or existing investment and determine its valuation.

Some of the key ratios are -

1. PE Ratio

2. Trailing PE Ratio

3. Forward PE Ratio

4. EPS Ratio

5. Cash EPS Ratio

6. Retention Ratio

7. Market Capitalization to Sales Ratio

8. Price to Sales Ratio

9. Enterprise Value to Revenue Ratio

10. Enterprise Value to EBITDA Ratio

11. Price to Cash Flow from Operation Ratio

12. Price to Book Ratio

13. Earnings Yield Ratio