Question

Assume that you are being interviewed for a job with an investment banking firm as a stock analyst. The interviewer is interested in how you would value a stock. In a concise manner describe the steps you would take in order to value a stock.

Answer 1

stocks or shares can be valued using methods they are as follows

1. earnings based valuation

2. revenue based valustion

3. cash flow based valuation

4. equity based valuation

5. members based valuation

Apart from these methods of valuing we can identify the best value stocks on the basis of 7 criteria given by Benjamin Graham, they are

1.quality rating

2. Debt to current asset ratio

3. current ratio

4.positive earnings per share growth

5. P/E ratio

6 Price to book value ratio

7. Dividend