Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
business (bad news), while a greater that one ratio could indicate accelerated growth. This ratio is very much a growth potential indicator and it does not take into account other sources of revenues, and last minute (so to speak) orders and cancellations. The book-to-bill ratio is a very effective growth measurement for companies concentrating on one class of products, requiring advanced orders from their customers. An example of this would be the PC business where chip makers (such as Intel or Applied Materials) receive advance orders from the computer manufacturers.
I probably covered a lot more in this section than you expected, but then again fundamental analysis is an exercise any investor should engage in (at least minimally) before sinking money into a company. One important question may be, how would one use this information? You would typically use these various data to contrast your target companies to other companies operating within the same industries and that are relatively the same size. You would also need to consider this data in relation to each other and to their previous values. This is certainly a difficult task, and it takes time and experience to master. Not all the items used in fundamental analysis apply the same way to all companies. Moreover, some items may not apply at all. It would be wrong to use the same value determination for Yahoo and Ford. But you can use the same criteria for Yahoo and Lycos, or Ford and General Motors. For many startups, many of these items may be inconclusive until enough data for a meaningful analysis is available. Also, there are a lot more criteria used for fundamental analysis that were not covered here, as exhaustive coverage would certainly stretch your patience.
Quantitative analysis has become more popular in recent years as computers have been used to crunch numbers and spit out results. …
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