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 Financial ratios are key tools used to assess a company's financial health and performance. They are calculated from data in financial statements and assist managers, investors, and analysts in decision-making processes. Here are some fundamental financial ratios and their meanings: 1. Profitability Ratios Net Profit Margin: Calculation: Net Profit / Net Sales Meaning: Indicates how much net profit the company makes from each unit of sales. A high net profit margin shows that the company is managing its costs well and increasing its profitability. Return on Equity (ROE): Calculation: Net Profit / Average Equity Meaning: Shows how much profit the company generates with the money shareholders have invested. A high ROE indicates that the company is using its equity efficiently. 2. Liquidity Ratios Current Ratio: Calculation: Current Assets / Current Liabilities Meaning: Measures whether a company has enough liquid assets to cover its short-term liabilities. Ideally, it should be abov...

  Differences Between Technical Analysis and Fundamental Analysis 1. Definition Technical Analysis : A method that attempts to predict future price movements by analyzing past price actions and trading volumes. It relies heavily on charts and indicators. Fundamental Analysis : A method to determine the intrinsic (true) value of an asset by analyzing economic, financial, and sector-specific data, such as a company’s financial statements and market conditions. 2. Purpose Technical Analysis : To identify price trends and potential reversal points. Fundamental Analysis : To determine the intrinsic value of an asset and make buy or sell decisions accordingly. 3. Data Used Technical Analysis : Price charts (candlestick, line, bar charts) Technical indicators (RSI, MACD, Bollinger Bands, etc.) Support and resistance levels Chart patterns (head and shoulders, flags, triangles, etc.) Fundamental Analysis : Company financials (income statement, balance sheet, cash flo...