10 Financial Ratios Every Investor Must Know

There are literally hundreds of financial ratios and thousands of investing terms but the truth is, as a Wall Street analyst, I used less than a dozen to pick stocks for clients. Besides making sure you pick the best stocks, narrowing down your list of financial ratios will save you hours in stock analysis.

In this video, I’ll reveal the 10 financial ratios every investor must know and how to use each. We’ll start off with the price multiples like the PE ratio and my favorite, the Enterprise-to-Sales ratio. I’ll show you why you can’t trust the price-to-earnings ratio and why other price multiples are better.

I’ll then show you financial ratios and investing terms for measuring return in your stocks and how to find the best run companies. I’ll show you how to find the dividend yield for a stock and how to avoid the riskiest stocks with the debt-to-equity ratio.

It’s all part of our three-video series on how to invest, three videos that will show you how to pick stocks and be a better investor. We started with the basics of how to read stocks and then looked at how to use the financial statements in your stock analysis. These are must watch videos for beginner investors!

0:00 Financial Ratios Every Investor Must Know
1:12 How to Use Financial Ratios to Analyze Stocks
3:36 PE Ratio and other Price Multiples
7:53 Financial Ratios for Return
9:05 My Favorite Investing Ratio for Stocks
10:03 Financial Ratios for Dividend Investors
13:15 The Best Financial Ratio to Use in Stock Analysis

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
#stockmarket #investing #stocks

[jambohomeventures]

You are completely spot on. You can't rely on one specific ratio. A combination of them is the best approach. PE ratio however is my favorite. Great video brother! I actually educate people too on how to make the passive income on my channel. I’m happy to see you offering value. Keep it up!

[jimburchett]

thanks for another great video. strange but i only counted 9 ratios,
1-p/e
2-p/s
3-p/b
4-ev/s
5-roe
6-optgmargin
7-payout
8-debt/eq
9-cfoptggro/netincgro.
what'd i miss?

[wowsppel]

Great vid. Now we know how to use these ratios. A video where you compare 2 companies with these ratios would be a good idea i think.

[FrugalRules]

I like that you shared how to avoid risky stocks. Diversity is important, but you have to be aware of the risks.

[MrLewis-lkus]

Even though I prefer technical analysis in volatile markets, I realize that fundamental analysis can help me find long term securities in the paper markets to park my volatile gains for the long term. I can use the paper markets relative to the volatile markets like stock investors use bonds to secure their stock market winnings.

[babyell]

I finally have an investment plan because of you. Picked my 15 stocks. I mainly pick blue chip stocks. Now have balanced portfolia

[Cheese-gmdg]

Your so helpful. You should absolutely consider being a professor. Slides were so well explained.

[marep]

Another head spinner! In a good way - so much to soak in. I am already using info from the last two videos and feeling more confident in my research. Thank you, Joseph.

[isettech]

I also use Yield on Cost. If the price is too high, the yield will be low. If the price has had recent bad news and the price drops drastically and the earnings is good with a low PE, then the Yield can be quite high. Yields in double digits to DRIP is a good thing. Due to the market sale following March sale prices, I have several yielding over 20% due to low cost. I love a good market sale. Stock that pays for itself in 5 years or less is very attractive. If the dividends drop, then this key indicator drops. I don't mind a full 100% investment refund in 5 years that can DRIP to grow the holdings. Amazon will not do that. Your only chance at doubling your shares is to sell high, wait for a price correction and buy back in. No idea the market timing for this.

[mynexusca]

Asalamalaikum Love you Mr Hogue thank you thank you thank you for the video and the bread and butter one. Shukran(means thank you in Arabic).

[rickshaw]

I use P/E, Market CAP to Book, or Return on Equity, yr/yr FFO growth for REITS

[markwelsch]

Thanks, Joe. I'm loving your videos! I've been using ROA instead of ROE as well as PEG instead of P/E. Please let me know your thoughts.

[albertsegura]

a video on what good ratios look like would be helpful too, thanks again!

[thijsdejong]

Great way to cut right to the core, thanks for explaining this

[kormrright]

Could you recommend an useful & practical book for scanning good stocks ?

[BrokeManFinance]

I use the detailed graphs in Robinhood!😛😛

[dforsythe]

At minute 8:02, what is that source of AAPL data you're using? Is that some version of Morningstar? Thanks for your channel!

[robertbarry]

Can you kindly talk about the 10 metrics from your download. This video did not get all 10 but the title implies it?

[DividendDwall]

Awesome video! Will be adding some of those ratios to my arsenal 👍

[matthewslowinski]

@josephhogue... what resources do you use to find potential stocks (ie fastly, zscaler) prior to doing research and deciding whether or not to purchase

Thank you again for all your insights and research