10 Investors KPIs You Should Know

10 Investors KPIs You Should Know

1️⃣ Earnings Per Share (EPS)

→ Shows the amount of profit generated for each outstanding share of stock.

→ Formula: (Net Income – Preferred Dividends) / Average Outstanding Shares

2️⃣ Price-to-Earnings Ratio (P/E Ratio)

→ Indicates how much investors are willing to pay for each dollar of earnings.

→ Formula: Stock Price / Earnings Per Share

3️⃣ Return on Equity (ROE)

→ Measures the profitability generated from shareholders' equity.

→ Formula: Net Income / Average Shareholders' Equity

4️⃣ Debt-to-Equity Ratio

→ Evaluates the proportion of debt financing compared to equity financing.

→ Formula: Total Debt / Shareholders' Equity

5️⃣ Gross Margin

→ Assesses the percentage of sales revenue remaining after deducting the cost of goods sold.

→ Formula: (Gross Profit / Revenue) x 100

6️⃣ Operating Margin

→ Shows the profitability of core business operations before interest and taxes.

→ Formula: (Operating Income / Revenue) x 100

7️⃣ Current Ratio

→ Measures a company's short-term liquidity and ability to meet immediate obligations.

→ Formula: Current Assets / Current Liabilities

8️⃣ Quick Ratio (Acid-Test Ratio)

→ Assesses a company's ability to cover short-term obligations with its most liquid assets.

→ Formula: (Cash + Accounts Receivables + Marketable Securities) / Current Liabilities

9️⃣ Return on Investment (ROI)

→ Evaluates the return earned from an investment relative to its cost.

→ Formula: (Net Profit from Investment / Cost of Investment) x 100

🔟 Dividend Yield

→ Measures the annual dividend income relative to the stock price.

→ Formula: Annual Dividend Per Share / Stock Price x 100

Understanding these KPIs is crucial for making informed investment decisions.

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