Ashutosh Kumar 
The return on capital employed (ROCE) measures the profitability of a company and the efficiency of its use of capital. It is calculated as EBIT divided by capital employed and shows how well a company generates returns on its investments. A higher ROCE indicates an efficient use of capital, while a lower ROCE indicates possible
The compound annual growth rate (CAGR) measures the average annual growth of an investment over a certain period of time, taking compound interest into account. It helps investors to evaluate and compare investments, set financial goals, and assess long-term performance. While it is easy to calculate and useful for smoothing out fluctuations, it ignores cash
Companies buy, sell, and trade their shares on the stock market. The stock market allows investors to participate in the growth of companies, diversify their portfolio, and potentially earn returns on their investments. In this article, we look at the stock market, the reasons for investing, the different types of stock markets and some key
Many people find mutual funds confusing or off-putting. We will try to simplify everything for you at a very basic level. A mutual fund is essentially a collection of money that many people (or investors) have invested. A qualified fund manager is responsible for that fund. What are mutual funds? Mutual funds act as a
The article explains return on equity (ROE) as an key financial ratio that measures the profitability of a company in relation to the shareholders’ equity. A higher ROE indicates an efficient use of capital to generate profits. It is calculated by dividing net profit by shareholders’ equity. Investors should compare return on equity to the
The article explains the dividend yield, a measure of the annual dividend paid by a company as a percentage of its share price. It explains how the dividend yield is calculated, the factors that influence it (profitability, share price, sector, and economic conditions), and the advantages it offers, such as a regular income and possible
The debt-to-equity (D/E) ratio measures the financial leverage of a company by comparing total debt to equity and indicating how much of the financing comes from debt compared to shareholders’ equity. A high leverage ratio indicates a higher reliance on debt, potentially increasing risk but also enabling growth, while a low leverage ratio indicates conservative
The price-to-book ratio (P/B) ratio is a financial ratio that compares the market value of a company with its book value and helps investors assess whether a share is overvalued or undervalued. It is calculated by dividing the market price per share by the book value per share. A low price-to-book ratio may indicate an
The Face value, also known as par value, is the original price of a share or bond set by the issuing company. In the case of shares, it represents a fraction of the company’s share capital and has only a minimal impact on the market price, which is influenced by supply and demand. For bonds,
There are many methods to determine the value of shares. Investors are prepared to pay the market value to buy a share. You can think of book value as the net asset value of a stock. Many well-known investors use book value to determine the fair price of a stock, which ultimately helps them in