YOU MUST HAVE GO THROUGH THIS IF YOU WANT TO BE SUCCESSFUL IN SHARE MARKET.
Before investing money in share market, you must go through some basic terms and analytical charts. And how should someone invest money with considering all these terms into his/her research. Research is important in stock market. Money is yours. You must know the better things about the company you believed for investing.
- Market cap:
Just for explain, it shows THE AMOUNT someone need to buy all the shares of a specific company.
Mathematically, Market Cap= (share price) X (total no. of shares)
- P/E ratio:
It is a ratio of price of share and earning per share. It plays an important role in considering a company for investing.
- Earning per share (EPS) (E):
In simple mathematically,
Earnings per share= (net worth of a company)/ (total no. of share of that company)
Before choosing the company for investing
1. Always compare the current P/E ratio to its historical P/E
2. AND compare historical P/E to its profit growth history.
It is necessary to compare all the above terms for considering investing company.
| Historical P/E gradually increases | Historical P/E gradually decreases | |
| Profit growth history gradually increases | May be right time to choose the company as a good or reliable one. | Can be considered as a good and reliable company. |
| Profit growth history gradually decreases | Red flag | Impossible, because it is connected this way that decrease of P/E results profit of company. |
P/E ratio is used to filter companies for choosing for investing. Many other terms are required for research in investing a company.
Pingback: TRADING FACT