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Assume you have limited funds and can invest in either Woolworths or BHP Billiton stocks. What...

Assume you have limited funds and can invest in either Woolworths or BHP Billiton stocks. What are the approriate financial ratios you would use to compare companies? (One company is apart of Food Grocery Sector whilst the other is Metals Mining Sector)
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Answer #1

Various financial ratio which should be relied upon for investment of funds are as follows:

Interest coverage ratio: If the company has take debt , then whether it is in position to pay its interest on timely basis.

Dividend per share: Dividend paying capacity of the companies or whether it is ploughing back its shares.

Return of Equity: Earnings attributed to equity shareholders.

Earning per share:Company having more earning per share should be basis of investment.

Current ratio: Whether the companies are able to meet its short term liabilities efficiently.

Debt to equity ratio: Reliability of company on its own fund or outside funds.

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