Finance. Business and Management: Finance. Accounting, Finance Essay (Essay Sample)
Market-based ratio analysissource..
Business and Management: Finance
(Name of the Author)
Market-based ratio analysis
Market-based ratios are the ones that indicate how the company is performing in the market. That is, the investors will first analyze the company ratios before making investments. Majorly, these ratios are essential in determining whether the stocks for the company are selling at their fair price, undervalued, or they are overvalued. The market ratios are also important in analyzing stock trends in the market, thus enabling the investor to make a concise decision. Investors can analyze the company’s earning capability and how its stocks can be profitable. Additionally, the underlying risk in stocks will be determined through the market ratios. Among the vital market-based ratios include;
Earnings per share (EPS)
Earnings per share (EPS) is used to measure, which is essential in measuring how the company’s net income on its shares. EPS is the main determinant of the profitability which the investors will get from buying the stocks of the company. It is calculated by dividing net income with the company’s outstanding shares (Laffy & Walters, 2016).
As for the Advance Auto spares company,
Net income = 423, 847
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