6 Critical Financial Ratios Every Investor Must Know
- Price-to-Earnings (P/E) Ratio: Measure stock valuation relative to earnings performance
- Debt-to-Equity Ratio: Assess company financial leverage and risk levels
- Return on Equity (ROE): Evaluate management efficiency in generating shareholder returns
- Current Ratio: Analyze short-term liquidity and operational stability
- Price-to-Book (P/B) Ratio: Compare market value to actual book value
- Free Cash Flow Yield: Determine real cash generation capabilities
Master these fundamental ratios to make informed investment decisions and avoid common pitfalls that cost amateur investors thousands annually.