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Dec 2, 2023 9:22 AM - Parth Sanghvi
Growth ratios in financial analysis are invaluable tools for predicting a company's potential expansion and performance trajectory. In this detailed guide, we'll explore various growth ratios, their significance, and how they facilitate forecasting future growth prospects for businesses.
Growth ratios are financial metrics that provide insights into a company's potential growth and expansion. Let's delve into essential growth ratios:
The dividend growth rate measures the annualized percentage growth of dividends over a specific period. Companies with consistent dividend growth rates often exhibit stable financial health and potential long-term profitability.
The retention ratio determines the proportion of earnings retained by a company to reinvest in its operations rather than distributing them as dividends. Higher retention ratios signify greater reinvestment for future growth opportunities.
The sustainable growth rate represents the maximum growth a company can sustain without additional equity or debt financing while maintaining a constant debt-to-equity ratio. It's a key indicator of a company's capacity for organic expansion.
Growth ratios aid in forecasting a company's future potential and financial health. By analyzing these ratios, investors and analysts can anticipate a company's growth trajectory, allowing for better-informed investment decisions.
Let's explore how growth ratios contribute to forecasting:
To harness the potential of growth ratios:
Growth ratios serve as fundamental metrics for anticipating a company's future growth prospects. Employing these ratios empowers stakeholders to make informed decisions, align strategies with growth potential, and prepare for future market changes.
Sep 11, 2023 1:38 PM - Rajnish Katharotiya
Price to Earnings is one of the key metrics use to value companies using multiples. The P/E ratio and other multiples are relative valuation metrics and they cannot be looked at in isolation. One of the problems with the P/E metric is the fact that if we are in the peak of a business cycle, earni...
Sep 11, 2023 1:49 PM - Rajnish Katharotiya
Price-to-Earnings ratio is a relative valuation tool. It is used by investors to find great companies at low prices. In this post, we will build a Python script to calculate Price Earnings Ratio for comparable companies. Photo by Skitterphoto on Pexels Price Earnings Ratio and Comparable Compa...
Oct 17, 2023 3:09 PM - Davit Kirakosyan
Shares of VMware (NYSE:VMW) witnessed a sharp drop of 12% intra-day today due to rising concerns about China's review of the company's significant sale deal to Broadcom. Consequently, Broadcom's shares also saw a dip of around 4%. Even though there aren’t any apparent problems with the proposed solu...