Financial Ratios

The Price to Sales Ratio (Price/Sales) is a stock valuation tool used to compare the market capitalization of a company to its sales. Essentially, it reveals the market value assigned to each dollar of sales generated.
The term profit margin refers to the amount of money a company makes after it subtracts the cost of goods sold from the gross revenues
Profitability ratios measure a companies financial performance and its ability to increase its shareholders value and generate profits
Return on assets is a key profitability ratio which measures the amount of profit made per dollar of assets that they own
Return on Invested Capital measures a companies net operating profit as a percentage of the leverage that they are using
The Sharpe ratio provides insight into the risk/reward scenario of a security or a portfolio. It measures excess investment returns as a function of volatility.
Have you ever wondered how you could determine the appropriate level of risk to reward? Are corporate bonds really that much better than Treasuries, or is the level of safety in US Treasuries worth the reduction in the yield? The best traders are those who can best understand the intimate connection of risk and reward, and the Sharpe ratio makes understanding the relationship that much easier.

A short straddle is a play on low volatility and theta decay. It involves selling 1 at the money call and put at the same strike price with the expectation that the stock stays within a tight range.

The total asset turnover represents the amount of revenue generated by a company as a result of its assets on hand. This equation is a basic formula for measuring how efficiently a company is operating.

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