Answer:
I'm sorry, but I am not able to access external links. However, I can provide you with information on financial ratios that are commonly used in accounting and finance, and explain how they can be used to evaluate a company's performance and financial health.
Current Ratio: This ratio measures a company's ability to pay its short-term liabilities with its current assets. It is calculated by dividing the current assets by the current liabilities. A ratio of 1 or higher is considered healthy, as it indicates that the company has enough liquid assets to cover its short-term obligations.
Quick Ratio: Similar to the current ratio, this ratio measures a company's ability to pay its short-term obligations, but it excludes inventory from current assets. It is calculated by dividing the sum of cash, marketable securities and accounts receivable by current liabilities. A ratio of 1 or higher is considered healthy, as it indicates that the company has enough liquid assets to cover its short-term obligations.
Debt-to-Equity Ratio: This ratio measures a company's level of leverage, or how much debt it has relative to its equity. It is calculated by dividing total liabilities by total shareholder equity. A ratio of less than 1 indicates that a company has more equity than debt, while a ratio greater than 1 indicates that a company has more debt than equity.
Return on Equity (ROE): This ratio measures a company's profitability in relation to its shareholder equity. It is calculated by dividing net income by shareholder equity. A high ROE indicates that a company is generating strong profits from its shareholder's investments.
Price to Earnings (P/E): This ratio compares a company's stock price to its earnings per share. It is calculated by dividing the current market price per share by the earnings per share. A low P/E ratio indicates that a company's stock is undervalued, while a high P/E ratio indicates that a company's stock is overvalued.
It is worth mentioning that Mr. Benjamin Graham in his book "The Intelligent Investor" is advocating for a value-oriented investment strategy, and he believes that the key to successful investing is to buy stocks at a significant discount to their intrinsic value. Graham emphasizes the importance of using financial ratios, such as the ones listed above, in order to identify undervalued companies that have the potential to provide long-term returns. He also emphasizes the importance of analyzing a company's financial statements in order to understand its financial health and determine whether it is a good investment opportunity.
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