MAFundamentals defines the foundation of Management Accounting from cost concept, classification and analysis. It provides general discussion on COST, VOLUME, PROFIT, VARIANCE and other information necessary for performance measurement, decision making and pricing.

Valuation Ratios

One method of Financial Ratio Analysis, Valuation Ratios is a measure of shareholder value as reflected in the price of the firm's stock.


  1. Book Value Per Share
    FORMULASIGNIFICANCE
    Equity
    Shares Outstanding     		Measure the amount of net assets available to the share holders of a given type of stock.

  2. Market to Book Ration or Price to Book Ratio
    Market Price per Share
    Book Value per Share     		Measure how high is the share's market price in relation to book value. Well managed firms should sell at high multiples of their book value.

  3. Price Earnings (PE) Ratio
    Market Price
    Earnings per Share     		Measure the relationship between the shares' market price and earnings per share. Growth companies are likely to have high PE ratio.

  4. Return to Shareholders
    Dividend Yield + Capital Gains
    Measurement Period    		Measures what shareholder actually earn over a specified period of years.

  5. Q-Ratio
    Market Values of all Securities
    Replacement Cost of Assets    		Reflect the markets valuation of new investment. When Q-ratio is greater than one (1.0), it means that the firm is earning returns greater than the amount invested.

  6. Return on Shareholders' Investment (ROSI)
    Dividends per Share + MV of Reinvested Earnings
    Price per Share     		A calculation of return on the price of a common share.