Fundamental Analysis & Valuation — 7 Terms Defined

PEG Ratio Fundamental Analysis & Valuation ratio (x, times) The price-to-earnings ratio divided by the expected annual earnings growth rate, used to judge whether growth justifies the multiple. PEG = Price-to-Earnings Ratio / Expected Annual Earnings Growth Rate (in percent)

Piotroski F-Score Fundamental Analysis & Valuation ratio (x, times) A nine-point checklist of year-on-year improvements in profitability, leverage and efficiency, scoring financial strength from 0 to 9. F-Score = sum of nine binary tests across profitability (4), leverage and liquidity (3), and operating efficiency (2)

Price-to-Book Ratio Fundamental Analysis & Valuation ratio (x, times) The market price of a share divided by its book value per share. P/B = Market Price per Share / Book Value per Share

Price-to-Cash-Flow Ratio Fundamental Analysis & Valuation ratio (x, times) Market capitalisation divided by operating cash flow, valuing the company against cash generated rather than accounting profit. P/CF = Market Capitalisation / Operating Cash Flow

Price-to-Earnings Ratio Fundamental Analysis & Valuation ratio (x, times) The price of one share divided by the earnings attributable to it, showing how many rupees are paid per rupee of annual profit. P/E = Market Price per Share / Earnings per Share

Price-to-Sales Ratio Fundamental Analysis & Valuation ratio (x, times) Market capitalisation divided by annual revenue, showing how much is paid per rupee of sales. P/S = Market Capitalisation / Annual Revenue

Pricing Power Fundamental Analysis & Valuation qualitative The ability to raise prices without losing enough volume to reduce profit. Test: gross margin is stable or rising through a period of input-cost inflation, with volumes broadly maintained