How To Understand The Stock Table: And Make Profitable Investment Decisions

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Understanding the stock table and making profitable investment decisions based on its analysis is quite easy and requires little dedication. Looking at a typical stock table, the headers include :
   opening price
   closing price
   % change
   quantity traded
   value of shares
   Number of deals (or deals)
   year high
   year low
   E.P.S
   P/E ratio 

 P/E RATIO:
     P/E ratio means price/earning ratio i.e. price to earning ratio. This is the ratio of the price of the stock to its earnings and it describes the relationship between the price of the stock and its earnings. You get P/E ratio by dividing the current price by the EPS. i.e.
   P/E ratio    =  current price / E.P.S
                             
This is about the most important factor to consider when making investment decisions because it tells you about the price of the stock and how much it has earned. A stock with low P/E ratio is highly preferred (better) to that with higher P/E ratio i.e. the lower the P/E ratio, the better. A high P/E ratio indicates that the stock is over priced. This means that the stock is priced more than its worth. Let us consider company ABC ;
Current price = N30
Current EPS = N2
Hence P/E ratio = 30/2
                                      = 15


 
 QUANTITY TRADED
     In some publications, this is called volume traded. The quantity traded represents the total units of a stock that were traded on a trading day.i.e the quantity of the stock that was bought/sold on that trading day. According to the new sec rule, the quantity traded of a stock must exceed 100,000 units for the price of the stock to change (increase or decrease). To some stock analyst, the quantity traded of a stock is an indication of the level of investor interest in the stock. The quantity traded of a stock is also seen as liquidity. This is one of the factors you look out for when buying a stock. Always buy a stock with high liquidity (large volume of quantity traded). Due to the high investor interest in the stock, it is easier to sell because you easily get interested buyers.

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