for Company Analysis, i would look at the ratios because they are the easiest to tabulate

- net Profit Margin.

- P/E Ratio.

- Book Value Per Share.

- Current Ratio.

- Debt Ratio.

- Inventory Turnover.

i understand there are other stuff like Economic Analysis and Industry Analysis

some questions :

- how do i look at these ratios and deduce that this stock is worth $1 and not $1.5?

- how often do companies report these ratios? quaterly or annually?

- would it be good to tabulate companies of the same industry and compare their to see who give the best sets of ratios. but what is "best set of ratio", how to compare?

- is there any program to tabulate these automatically and nicely

also, whats your take on http://www.sharesguru.com/valuationTools/cgviFormula.htm ?

CGVI : How it Works

Primarily used as an indicator in selecting shares worth further analysis. It combines the price/earnings ratio and the reinvestment rate into a single rating.

The formula:

1. Find the earnings yield, which is earnings per share divided by the price of the stock. Earnings yield is the reciprocal of the price/earnings ratio. Other things being equal you want to buy a stock with a high earnings yield, that is, with a low P/E.

2. Find the reinvestment rate. This is the amount of earnings not paid out in dividends (Earnings per share less dividends per share), divided by book value. It’s a measure of how fast book value per share is growing. It is a kin of the more often used return on equity, or earnings divided by book value. Either statistic tells us something about how effectively a company uses shareholder’s capital to make money. The reinvestment rate however, gives credit only for returns to capital that are put back into the business

3. Find the dividend yield, the annual payout divided by the stock price.

Now add A, B and C to give CGVI.

Suggested Levels:

>30

Special Buy

24 – 30

Optimal Buy

20 – 24

Accumulate

17 – 20

Hold

12 – 17

Look for better investment

<12

Do not consider

Assuming all other factors are constant, a doubling in earnings per share will roughly double the stock’s CGVI.

If a company increases the percentage of earnings paid out as dividends, it will reduce it’s CGVI if the stock is selling above book value. Increased dividends help when the stock is selling below book value.

One point to take note of, as the formula relies on past data, it assumes that the company will be able to continue to generate the same return in the future. For larger companies, in the later stages of growth, that will often be a problem. Due to this weakness, the formula works best with small and medium sized companies, where the potential for continued profitable growth is greater.

experts here pls teach a newbie like me :wink: