A quick and accurate way to calculate key investment ratios Written by a leading finance expert, this book offers readers simple explanations on how to calculate and interpret key financial ratios-information that is essential for the accurate assessment of a company's financial condition and the true value of its shares. This comprehensive resource is packed with numerous examples from actual company reports and features a supporting Web site at www magicnumbersbook.com. Readers will also find many online reference sources, including company Web sites and free software offers. Peter Temple is a graduate in economics and statistics from the University of Wales, and is a Fellow of the UK Securities Institute. After an 18-year career as an investment analyst in fund management and investment banking, Temple turned to full-time writing in 1988 as a freelance financial journalist and author.
1. Price to Sales Ratio
2. Price to Book Value
3. Enterprise Value to Sales
4. EV/EBITDA
5. Peg Factor
6. Price to Research Ratio
7. Reinvested Return on Equity
Part 2: Income Statement "Magic Numbers"
8. Sales, Earnings, and Equity Per Share
9. Sales, Earnings, and Equity-per-share Ratios
10. Staff Costs as a Percentage of Sales
11. Directors? Remuneration as a Percentage of Net Income
12. Sales and Profit Per Employee
13. "Pro-Forma" Earnings
14. Margins
Part 3: Cash Flow Statement "Magic Numbers"
15. Operating Cash Flow/Operating Profit
16. Price to Free-cash-flow Ratio
17. Free Cash Flow (FCF) to Sales
18. Return on Invested Capital
19. Discounted Cash Flow
Part 4: Balance Sheet "Magic Numbers"
20. Current Ratio and "Acid Test"
21. Debtors Days and Creditor Days
22. Stock Days and Stockturn
23. Gearing
24. Return on Capital Employed
25a. Z-Score Components
25b. The Z-Score
Appendix: Finding the Information
Index
About Peter Temple
Peter Temple has spent 33 years working in or writing about financial markets. After an 18-year career in fund management and stockbroking, he became a full-time writer in 1988. He has written more than a dozen books about finance and investing, mainly aimed at private investors. His articles appear widely in the financial press. He and his wife live in part of a converted water mill in the English Lake District.
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