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21

Curious, are you asking about average, or the good numbers? The median family doesn't have $2500 to address an emergency. We are a nation of debtors, and spenders. A young couple at .8 is doing well. It means they saved 20% for a down payment, and just bought a house. Not too tough to buy with 5% down, have no other savings, and a student loan to put the ...


11

What is your biggest wealth building tool? Income. If you "nerf" your income with payments to banks, cable, credit card debt, car payments, and lattes then you are naturally handicapping your wealth building. It is sort of like trying to drive home a nail holding a hammer right underneath the head. Normal is broke, don't be normal. Normal obtains ...


9

Average person's life I'm going to say there is no normal debt level. Here's the standard life pattern: When someone finishes their studies in university, and are therefore highly educated, they'll have student debt with low assets, so they'll probably be in debt (negative equity, if you will). At least that's the case in Australia, where student debt is ...


8

The problem with having no debt at all and relying totally on your income from working is that if you lose your job you'll have no income. Now there are 2 types of debt: good debt and bad debt. You should stay away from bad debt. But good debt is good — it should produce an income higher than the interest payments on the debt. Good debt will help you ...


3

a negative PEG (Price to Earnings Growth) ratio can mean one of two things: either the company's current earnings are negative, or its expected earnings growth rate is negative. Neither are desirable outcomes. If a company's current earnings are negative, you should assess whether this is a short-term problem (e.g. brought about by one-off impairment or ...


3

According to Understanding The Income Statement, it should be the former. Observe the link's sample income statement: The profit margin is Net Sales over Net Income. Net Income, meanwhile, is the sum of Net Sales (+) Cost of Sales (-) Operating Expenses (SG&A) (-) Other Income (Expense) (+/-) Extraordinary Gain (Loss) (+/-) Interest Expense (-) Taxes (-...


3

Yes definitely Warren Buffet averaged returns of only around 21% throughout his 40 years in business. ROE of 23% is probably more than double the ROE of most companies , whats more as the saying goes its easier to grow sales from 1 million to 100 million than to grow sales from 100 million to 10 billion


3

One idea: If you came up with a model to calculate a "fair price range" for a stock, then any time the market price were to go below the range it could be a buy signal, and above the range it could be a sell signal. There are many ways to do stock valuation using fundamental analysis tools and ratios: dividend discount model, PEG, etc. See Wikipedia - Stock ...


2

The book value per share is the amount of the assets that will go to common equity in the event of liquidation. So higher book value means the shares have more liquidation value. Strictly speaking, the higher the book value, the more the share is worth. There may be reasons to look for low book value, such as pursuing investments that the market considers ...


2

It might seem like the PE ratio is very useful, but it's actually pretty useless as a measure used to make buy or sell decisions, and taken largely on its own, pretty useless becomes utterly and completely useless. Stocks trade at prices based on future expectations and speculation, so that means if traders expect a company to double its profits next year, ...


2

Both companies referenced above report under IFRS (or at least the Australian equivilent), however, they seperate costs differently -- BHP under nature of expense method and FMG under function of expense method. There is no requirement to indicate a cost of sales figure under IFRS on the income statement. (For example, how would one derive cost of sales for ...


2

Actually it is taken into account. The capital charge for Year 1 is the 5$ shown under Year 2 (60 * 8.5%), for Year 2 is the 11$ (126 * 8.5%) and so on. Hope this makes sense.


1

Let me get this straight. You are attempting to find a competitor of a public company by looking companies with similar P/E ratios? This can only fail. P/E ratio tells nothing about the sector a public company operates in. For example, many steelmaking companies have a low P/E ratio today. Oil companies also have a low P/E ratio. Yet, they are not ...


1

I think any answer to this one is going to be in the realms of personal preference. I can think of a couple of approaches. Graham was all about having a margin of safety, preferably more than one, i.e. the stock should have a low valuation compared to book, it should have low debts, be cash generative etc. So pick one. If you're looking to max out your ...


1

Let's answer the questions one at a time. Always try to match the cash flow with the source of capital. You use net income for ROE because this is the cash flow to the equity investors. Interest payments go to debt holders and taxes to the government. On the contrary, you use EBIT for ROA because you are interested on the total performance, not only equity ...


1

Return on Equity is a ratio of Net Profit for some fiscal year let's say 2018 and Total equity at last date of the fiscal year. No - you use average equity (including retained earnings), so you'd take the starting equity plus the ending equity and divide by 2. You are correct in your thinking that profits don't fully contribute to themselves, but they do ...


1

My question is, should I separate the interest expense from interest received, and use the interest expense figure to calculate the Interest Coverage Ratio? Yes - the Interest Coverage Ratio is how many times over it could pay its interest obligations with current earnings, so interest earned should not be considered. Also, does having a net interest ...


1

If you would like to find data on a specific industry/market sector, a good option is IBISworld reports. You can find their site here. You can find reports on almost any major US sector. The reports include historical data as well as financial ratios. In college projects, they were very useful for getting benchmark data to compare an individual business ...


1

Maria, there are a few questions I think you must consider when considering this problem. Do fundamental or technical strategies provide meaningful information? Are the signals they produce actionable? In my experience, and many quantitative traders will probably say similar things, technical analysis is unlikely to provide anything meaningful. Of course you ...


1

"Profit after tax" can have multiple interpretations, but a common one is the EPS (Earnings Per Share). This is frequently reported as a TTM number (Trailing Twelve Months), or in the UK as a fiscal year number. Coincidentally, it is relatively easy to find the total amount of dividends paid out in that same time frame. That means calculating div cover is ...


1

Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%.


1

The idea of a Value premium is something that is the subject of some debate. Who Killed Value? would be an article from 2001 by William Bernstein that discusses this in some depth. Price to book value can be used as a way to determine the valuation of a company though low P/B may be a sign that the company isn't thought to have great prospects, there can ...


1

Shortly after college (Engineering BS/MS) my wife & I started buying rental property for 15% down. Within a year of purchase they were cash flow positive. Luckily in our area housing has appreciated 7.5% annually. We treated it like a business and always refinanced to lower interest rates or pulled out cash to buy additional properties. My present debt/...


1

0.8 and 0.5 are fairly common numbers for Debt to Asset Ratios. I agree it is confusing since most places on the internet talk about Debt to Asset Ratio, and even here most commenters used Debt to Asset Ratios when responding. In order to have a Debt to Equity Ratio of .8, someone would have to have 100% of their equity in additional assets after buying a ...


1

You need to clarify through a description what you want, many different margin names are often used interchangeably(EBIT = Operating Income etc.) Gross Margin the way I think you're asking would use Gross Profit, which is Revenue - Cost of Goods Sold. And You would arrive at Gross Margin through Gross Profit / Revenue.


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