Question: What ratio formulas are used to evaluate publicly traded companies in the healthcare sector for investing in the companies stock?
The key ratio formulas used to evaluate publicly traded companies in the healthcare sector for investing in their stock are:
Price-to-Earnings (P/E) Ratio
P/E Ratio = Stock Price per Share / Earnings per Share (EPS) The P/E ratio compares a company’s stock price to its earnings and is useful for evaluating mature, profitable healthcare companies. A higher P/E ratio may indicate investors are willing to pay more for each dollar of earnings, often because they expect higher future growth.
Price-to-Sales (P/S) Ratio
P/S Ratio = Market Capitalization / Total Revenue The P/S ratio compares a company’s stock price to its revenue or sales. It is commonly used for evaluating high-growth healthcare companies that may not be profitable yet, as revenue growth is a key indicator of market share captured.
Debt-to-Capitalization Ratio
Debt-to-Capitalization Ratio = Long-Term Debt / Total Available Capital This ratio indicates how highly leveraged a healthcare company is in relation to its total financial assets. Analysts prefer to see ratios less than 1, as this indicates lower overall financial risk.
Operating Margin
Operating Margin = Operating Profit / Revenue Operating margin allows investors to see the amount of profit a healthcare company makes from its core operations, before deducting interest and taxes. It is a key profitability ratio. These ratios provide insight into the valuation, growth potential, leverage, and profitability of healthcare companies. Analyzing a combination of these ratios, compared to industry peers, helps investors assess the relative attractiveness of investing in a healthcare stock.
Question: Write html code for formulas an calculate price to earnings ratio, price to sales ratio, debt to capitalization ratio, operating margin.
Price-to-Earnings (P/E) Ratio
P/E Ratio = Stock Price per Share / Earnings per Share (EPS)
Enter Stock Price per Share:
Enter Earnings per Share (EPS):
Price-to-Sales (P/S) Ratio
P/S Ratio = Market Capitalization / Total Revenue
Enter Market Capitalization:
Enter Total Revenue:
Debt-to-Capitalization Ratio
Debt-to-Capitalization Ratio = Long-Term Debt / Total Available Capital
Enter Long-Term Debt:
Enter Total Available Capital:
Operating Margin
Operating Margin = Operating Profit / Revenue
Enter Operating Profit:
Enter Revenue: