Just throwing out financial ratios and then?
I'm asked to summarize the financial of two companies. I looked at someone's work, and it basically listed out all those ratios year by year. What's the point of listing out those ratios. They don't mean anything themselves. Can someone shed me some lights on how to analyze those ratios?
I'm looking at two large telecom companies. I did my research and basically, people look at capex, EBITDA, Operating cashflow, ebitda margin, this and that.
I got all those. But so what? What am I supposed to do with them?
Am I suppose to analyze the trend. Why this and why that number?
You may have to be more specific here... Which ratios?
A couple things:
The ratios should be compared against comparable competing firms over time. Are some companies always priced at a premium to others? Are some consistently more leveraged than others?
Also compare some ratio's to each other. If P/E is diverging from P/CF by more each year, that would indicate that the company's earnings are of poorer quality. They may be using more aggressive accounting methods to inflate earnings.
You should ask yourself, what's this particular metric's significance? Then discuss what this metric and it's direction of change mean for the company or for investors before you throw it on a chart. People are going to ask why is that relevant.
If you need a lot of help on particular metrics, I suggest investopedia or searching/posting specifics here.
I thought about comparing against comparables, but that means I have to spend more time to look up those companies and calculate those data.
No shit dude
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