Question: What ratio formulas are used to evaluate publicly traded companies in the Materials sector for investing in the companies stock?
To evaluate publicly traded companies in the Materials sector for investing in their stock, some of the key ratio formulas used 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 per share. It is widely used to value materials companies and indicates how much investors are willing to pay for each dollar of earnings. A higher P/E may suggest higher expected future growth.
Debt-to-Equity (D/E) Ratio
D/E Ratio = Total Liabilities / Shareholders’ Equity The debt-to-equity ratio compares a company’s total debt to its shareholders’ equity. It provides insight into how much debt a materials company is using to finance its assets relative to equity. A lower D/E ratio is generally preferred as it indicates lower financial risk.
Current Ratio
Current Ratio = Current Assets / Current Liabilities The current ratio measures a company’s ability to pay short-term obligations using its most liquid assets. A ratio above 1 suggests the company can cover its current liabilities with current assets. For materials companies, a current ratio between 1.2 and 2.0 is considered healthy.
Inventory Turnover
Inventory Turnover = Cost of Goods Sold / Average Inventory Inventory turnover measures how efficiently a materials company manages and sells its inventory. A higher turnover ratio indicates better inventory management and liquidity. Comparing a company’s inventory turnover to industry peers provides useful benchmarking.
Gross Margin
Gross Margin = (Revenue – Cost of Goods Sold) / Revenue Gross margin shows the profitability of a materials company’s core operations after accounting for the cost of goods sold. A higher gross margin indicates greater profitability and pricing power. Analyzing gross margin trends over time and compared to competitors provides insight into a company’s competitive positioning. These ratios, analyzed in combination and compared to industry peers and historical trends, help investors assess the valuation, leverage, liquidity, efficiency, and profitability of materials companies. The capital-intensive nature of the materials sector makes these metrics particularly important when evaluating investment opportunities.
Question: Write html code for formulas an calculate price to earnings ratio, debt to equity ratio, current ratio, inventory turnover, gross 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):
Debt-to-Equity (D/E) Ratio
D/E Ratio = Total Liabilities / Shareholders’ Equity
Enter Total Liabilities:
Enter Shareholders’ Equity:
Current Ratio
Current Ratio = Current Assets / Current Liabilities
Enter Current Assets:
Enter Current Liabilities:
Inventory Turnover
Inventory Turnover = Cost of Goods Sold / Average Inventory
Enter Cost of Goods Sold:
Enter Average Inventory:
Gross Margin
Gross Margin = (Revenue – Cost of Goods Sold) / Revenue
Enter Revenue:
Enter Cost of Goods Sold: