Question

g An informed and prudent investor uses a variety of measures such as financial ratios, book value, earnings per share, return on equity etc. to evaluate the worthiness and prospects of stocks he/she would invest in. It is important for you as an investor to understand how these values are calculated and what do they mean.

Answer 1

Investors use various measures to evaluate stocks, including financial ratios, book value, earnings per share, and return on equity.

Step-by-step explanation:

When evaluating stocks as an investor, there are several measures that can be used to assess their worthiness and prospects. These include financial ratios, book value, earnings per share, and return on equity.

Financial ratios provide insights into a company's profitability, liquidity, and solvency. Book value represents the value of a company's assets after subtracting liabilities, and earnings per share measure a company's profitability per share of stock. Return on equity evaluates how effectively a company is utilizing shareholders' equity to generate profits.

Answer 2

Investors use financial ratios, book value, and other measures to evaluate stocks' worthiness and prospects.

Step-by-step explanation:

As an investor, it is important to understand how to evaluate the worthiness and prospects of stocks. One way to do this is by using financial ratios, such as earnings per share (EPS) and return on equity (ROE). These ratios help you assess a company's profitability, efficiency, and financial health. For example, a high EPS indicates that a company is generating more earnings for each share of stock, while a high ROE suggests that a company is using its equity efficiently to generate profits.

Book value is another measure that investors use to assess a company's worthiness. It represents the net worth of a company's assets minus its liabilities and intangible assets. If the book value of a company is higher than its stock price, it may indicate that the stock is undervalued.