Valuation Ratios

Valuation ratios are tools investors use to assess a company's worth relative to its financial performance. They compare key metrics, like stock price to earnings (P/E ratio) or sales (P/S ratio), to help determine if a stock is overvalued or undervalued. These ratios enable investors to analyze a company's market value in context, making comparisons across industries or time periods. Essentially, valuation ratios provide a snapshot of how the market values a company's profits, sales, or assets, aiding informed investment decisions without requiring detailed financial expertise.