Definition: Market capitalization is the total market
value of a company's outstanding shares of stock. It’s calculated by
multiplying the current share price by the total number of outstanding shares.
Example: If a company has 1 million shares
outstanding, and its share price is ₹500, the market cap would be:
Market Cap=Share Price×Outstanding Shares=500×1,000,000=₹500,000,000
Earnings Per Share (EPS)
Definition: EPS indicates the portion of a company’s
profit allocated to each outstanding share of common stock. It’s calculated as
net income minus dividends on preferred stock, divided by the number of
outstanding shares.
Example: If a company has a net income of ₹1 million
and pays ₹200,000 in dividends on preferred stock, with 100,000 shares
outstanding:
EPS=Net Income−Dividends/Outstanding Shares=1,000,000−200,000/100,000=₹8
Stock Price-to-Earnings Ratio (P/E Ratio)
Definition: The price-to-earnings (P/E) ratio
measures a company's current share price relative to its earnings per share
(EPS). It’s used to evaluate if a stock is overvalued or undervalued.
Example: If a company's share price is ₹100, and its
EPS is ₹10, the P/E ratio would be:
P/E Ratio=Share Price/EPS=100/10=10
3. Intrinsic Value
Definition: Intrinsic value refers to the perceived
or calculated value of an asset, based on fundamental analysis without
reference to its market value.
Example: If an analyst determines that a stock should
be worth ₹120 based on its future cash flows and growth potential, the
intrinsic value is ₹120, indicating it may be undervalued if trading at ₹100.
Price to Book Value (P/B Ratio)
Definition: The price-to-book (P/B) ratio compares a
company's market value to its book value. It’s calculated as the market price
per share divided by the book value per share.
Example: If a company's share price is ₹200, and its
book value per share is ₹100, the P/B ratio would be:
P/B Ratio=Share Price/Book Value per Share=200/100=2
Pledged Percentage
Definition: The pledged percentage refers to the
proportion of a company’s shares that have been pledged as collateral against
loans taken by promoters or directors.
Pledged Percentage=Pledged Shares/Total Shares Owned by Promoters
Book Value
Definition: Book value is the value of a company
according to its balance sheet. It is calculated as total assets minus total
liabilities.
Example: If a company has total assets of ₹10 million
and total liabilities of ₹6 million, the book value would be:
Book Value=Total Assets−Total Liabilities=10,000,000−6,000,000=₹4,000,000
Face Value
Definition: The face value (or par value) of a stock
is the nominal value assigned to the stock by the issuing company. It is used
for accounting purposes and may not reflect the market value.
Example: If a company's stock has a face value of
₹10, that amount is what the company declares as the value per share at the
time of issuance.
Dividend Yield
Definition: Dividend yield is a financial ratio that
shows how much a company pays out in dividends each year relative to its stock
price. It’s calculated by dividing the annual dividends per share by the
stock’s price per share.
Example: If a company pays an annual dividend of ₹5
per share and its stock price is ₹100, the dividend yield would be:
Dividend Yield=Annual Dividend per Share/Share Price=5/100=0.05 or 5%
Piotroski Score
Definition: The Piotroski score is a financial
scoring system used to determine the strength of a firm's financial position.
It is based on nine criteria, focusing on profitability, leverage, liquidity,
and operating efficiency.
Example: Each criterion is scored as either 0 or 1. A
company that meets 7 out of the 9 criteria would have a Piotroski score of 7,
indicating stronger financial health.
Promoter Holding
Definition: Promoter holding refers to the percentage
of a company's shares that are held by the promoters or founding members. It
reflects the level of control and commitment of the promoters towards the
company.
Example: If a company has a total of 1 million
shares, and promoters hold 300,000 shares, the promoter holding percentage
would be:
Promoter Holding=Promoter Shares/Total Shares×100
300,000/1,000,000×100=30%
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