Valuation Master Class

The net profit margin is a financial ratio that tells you how much profit a company makes compared to its revenue in the form of a percentage.

The asset turnover ratio is used to measure the efficiency of a company. It looks at how efficiently a company uses its assets to produce sales.

Stock valuation is the process of determining the current (or projected) worth of a stock at a given time period. There are 2 main ways to value stocks: absolute and relative valuation.

Risk assessment is an evaluation method used to understand an investor’s risk rating which helps them come up with a suitable investment strategy to achieve their financial goals.

The receivable collection period is a period when a firm receives the amount owed by their customers.

The current ratio or working capital ratio is a liquidity ratio that measures a firm’s ability to pay its short term liabilities. Short term liabilities are debts or any obligation that is due within one year.

The Arbitrage Pricing Theory is a method used to estimate the returns on assets and portfolios. It is a model based on the linear relationship between an asset’s expected risk and return.

Modern Portfolio Theory is a theory presented in 1952 by Harry Markowitz on how risk-averse investors can create portfolios to maximize the return on investments based on the optimal levels of risk.