Valuation Ratios

Valuation, or market value, ratios are used to determine the value of a stock or security when compared to a certain measure like profits or enterprise value. In this section, we cover the most important valuation ratios you need to know.

What are valuation ratios?

Valuation ratios, sometimes called market value ratios, are measurements of how appropriately shares in a company are valued and what type of return an investor may get. By calculating the market value a potential investor can see if the shares are overvalued, undervalued, or at a fair price. It also helps determine how much a potential investor should buy.

There are several different valuation ratio calculations that can be done to find the market value of a company or stock. Understanding how each ratio works can give you a better evaluation of a company’s financial health.

List of valuation ratios

Below is the complete list of valuation ratios we have covered. Each will provide a detailed overview of the ratio, what it’s used for, and why.

They also explain the formula behind the ratio and provide examples and analysis to help you understand them.

More financial ratios