Hot answers tagged

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

See Berkshire Hathaway Inc. (BRK-A) (The Class A shares) and it will all be clear to you. IMHO, the quote for the B shares is mistaken, it used earning of A shares, but price of B. strange. Excellent question, welcome to SE. Berkshire Hathaway is a stock that currently trades for nearly US$140,000. This makes it difficult for individual investors to buy ...


10

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 ...


5

Assuming you are saying that the company issues 20,000 additional shares of its own stock and sells them for $8 each: The money from the sale is not income and not part of earnings. It is capital and appears on the balance sheet as part of shareholder's equity. With no other transactions, yes, the total of shares outstanding is increased by 20,000 to 100,...


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

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

I found a possible data source. It offers fundamentals i.e. the accounting ratios you listed (P/E, dividend yield, price/book) for international stock indexes. International equity indices based on EAFE definitions are maintained by Professor French of French-Fama fame, at Dartmouth's Tuck Business School website. Specifics of methodology, and countries ...


2

The idea of using EBIT (earnings before interest and taxes) is to nullify the effects of financial policy and tax rates when comparing different companies because they can vary widely from one company to the next. By ignoring interest (financial policy) and taxes, it allows an analyst/manager/bank/etc to focus on the company's ability to turn a profit from ...


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

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

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 ...


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

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.


1

Yahoo!'s metric is EPS (ttm), meaning the Earnings per Share over the trailing twelve months. The EPS that you're calculating is not the over trailing twelve months, rather it comes from the 10K covering the 12 months ending Aug 31, 2011. Adding EPSs together from the 4 most recent quarters yields an EPS of 2.11, which is pretty close to the Yahoo figure. ...


1

In order to calculate the ratio you are looking for, just divide total debt by the market capitalization of the stock. Both values can be found on the link you provided. The market capitalization is the market value of equity.


Only top voted, non community-wiki answers of a minimum length are eligible