A 2:1 revenue to marketing cost ratio wouldn’t be profitable for many businesses, as the cost to produce or acquire the item being sold (also known as cost-of-goods-sold, or COGS) is about 50% of the sale price. For these businesses, if you spend $100 in marketing to generate $2...
In theory, a PEG ratio of 1.0 indicates that the market value of the stock is aligned with its projected earnings growth. A ratio above 1.0 suggests the stock may beovervalued, while a ratio below 1.0 is generally considered favorable, indicating that the stock may beundervalued. Key Takeawa...
Variability of ROI:Firms often use the Revenue-To-Cost (R:C) ratio instead of traditional ROI, as it offers a simpler way to assess returns. General benchmarks suggest 5X is good, 10X outstanding, and 20X exceptional. Customizing Minimum Viable R:C:Factors like average case value, contribut...
What is a good net profit to sales ratio? There’s no one-size-fits-all answer to what constitutes a “good” net profit to sales ratio. It varies depending on the industry, company size, and economic conditions. Here are some general guidelines. ...
As an example, assume you want to buy a home with a fair market value of $100,000. You have $20,000 available for adown payment, so you'll need to borrow $80,000. Your LTV ratio would be 80%, because the dollar amount of the loan is 80% of the value of the house, and $...
Understanding the Price-to-Sales Ratio The P/S ratio is an investment valuation ratio that shows a company'smarket capitalizationdivided by its sales for the previous 12 months. It's a measure of the value investors are receiving from a company's stock by indicating how much equity is requir...
“Safety 1st” PEG Ratio- An Intelligent Growth Estimate for a Margin of SafetyA big problem for value investors using ratios to evaluate stocks is incorporating growth into the evaluation. Without growth, a stock likely won’t revert to... ...
Loan-to-value ratio Loan-to-value ratio, or LTV, is a phrase we often see thrown about when the housing market is being discussed, though many are left clueless as to what it actually means. It is, in fact, a rather simple concept. We’ll explain exactly what LTV is, and what the...
The VanEck Semiconductor ETF (SMH) has been a good example of what can happen if investors look beyond the expense ratio. The ETF has a 0.35% expense ratio, which is reasonable but higher than that of many other passively managed funds. However, the fund has delivered a 71.9% year-to-...
Sometimes, the market-to-book ratio (M/B) is displayed on a per share basis: Market-to-book Ratio = Share Price ÷ Book Value Per Share What Is A Good Market-To-Book Ratio? The purpose of calculating a market-to-book ratio is to figure out whether the stock is undervalued, and the...