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Industry averages (of financial ratios) are generally using as benchmarks or tools which helps business to make comparisons that helps to determine its position within the industry and evaluate financial performance of the business. [1]
Financial ratios allow for comparisons between companies; between industries; between different time periods for one company; between a single company and its industry average; Ratios generally are not useful unless they are benchmarked against something else, like past performance or another company. Thus, the ratios of firms in different ...
Not all multiples are based on earnings or cash flow drivers. The price-to-book ratio (P/B) is a commonly used benchmark comparing market value to the accounting book value of the firm's assets. The price/sales ratio and EV/sales ratios measure value relative to sales. These multiples must be used with caution as both sales and book values are ...
If the ratio approaches 200%–as it did in 1999 and a part of 2000–you are playing with fire". [8] [3] Buffett's metric became known as the "Buffett Indicator", and has continued to receive widespread attention in the financial media, [6] [1] [9] [10] and in modern finance textbooks. [11] [12] [13]
Enterprise value/EBITDA (more commonly referred to by the acronym EV/EBITDA) is a popular valuation multiple used to determine the fair market value of a company. By contrast to the more widely available P/E ratio (price-earnings ratio) it includes debt as part of the value of the company in the numerator and excludes costs such as the need to replace depreciating plant, interest on debt, and ...
A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. [6]
World map by trade as a share of GDP. [1]This is the list of countries by trade-to-GDP ratio, i.e. the sum of exports and imports of goods and services, divided by gross domestic product, expressed as a percentage, based on the data published by World Bank.
Arithmetic return: average return of different observation periods; Geometric return: return depending only on start date and end date of one overall observation period; Rate of return or return on investment; Total shareholder return: annualized growth in capital assuming that dividends are reinvested