FUNDAMENTAL ANALYSIS
PROFITABILITY RATIO
Return on capital employed (ROCE)
ROCE
Return on equity (ROE)
ROE
Return on assets (ROA)
ROA
17%
↑
NEAR VALUE
15%
↑
12%
↑
LEVERAGE OR DEBT RATIO
Interest coverage ratio
Should Be Higher
↑
Debt to equity ratio
Should Be below-1
↓
Debt to asset ratio
Should Be low-%
↓
Financial leverage ratio
Less Than or Equal To -1
↑↓
VALUE RATIO
Price-to-earnings ratio (P/E ratio)
PE
Price-to-book value (P/B ratio)
CMP/BV
Price-to-sale value (P/S ratio)
CMP/SALE
Should Be Higher
↓
PEER COMPARISON
Should Be low
↓
PEER COMPARISON
Should Be low
↓
PEER COMPARISON
OPERATING RATIO
Fixed asset turnover ratio
Should Be Higher
↑
PEER COMPARISON
Total asset turnover ratio
Should Be Higher
↑
PEER COMPARISON
Working capital turnover ratio
Should Be Higher
↑
PEER COMPARISON
1 Earnings Per Share (EPS)
2 Price to Earnings Ratio (PE)
3 Price to Book Ratio (PBV)
4 Debt to Equity Ratio
5 Return on Equity (ROE)
6 Return on capital employed (ROCE)
Increasing for the last 5 years
Lower compared to competitors and
industry average
Lower compared to competitors and
industry average
Should be less than 1 (Preferably
debt<0.5 or Zero)
Should be greater than 15% (Last 3 Yrs
Avg)
Should be greater than 15% (Last 3 Yrs
Avg)
7 Price to Sales Ratio (P/S)
Smaller value is preferred
8 Current Ratio
Should be greater than 1
9 Dividend
Increasing for the last 5 years
Average return on equity 3Years > 18%
AND
Average return on equity 5Years > 18%
AND
Return on capital employed > 15% AND
Debt to equity < 1 AND
Sales growth 3Years > 10% AND
Sales growth 5Years > 15% AND
Current ratio > 1