Value Investing-A Fool-Proof guide to Value Investing V

3 41
Avatar for viczwa
Written by
4 years ago

If you don't find a way to make money while you sleep, you will work until you die

-Warren Buffett

Source:

https://wallpaperaccess.com/warren-buffett

In today's article we will add to our arsenal more tools we can use in value investing to get the most out of our investments.

Now onto the work of the day. The tools needed for successful value investing.

Debt to Current Assets ratio

The debt to current assets ratio simply tells you whether a company has more debt than assets or less debts than assets. The value is calculated by

total liabilities / current assets.

These values can be located in the balance sheet.

Balance sheet showing where to locate Total Assets & Total Liabilities

Source

https://www.google.com/search?q=debt+to+current+assets+ratio&prmd=inv&sxsrf=ALeKk03fpa22M8FtG1q7WSZtLTzszWszGA:1600615773120&source=lnms&tbm=isch&sa=X&ved=2ahUKEwj5i9C0hvjrAhUgRxUIHdSPDeYQ_AUoAXoECA8QAQ&biw=360&bih=476&dpr=2#imgrc=JNoeg2eSWvAGOM&imgdii=-KVqhOI-FYRkmM

Analysis of ratio

-A value of 1 shows that the amount of debt is exactly equal to the amount of assets which signifies a fairly healthy company. A value of less then 1.1 is usually a good figure to work with.

-A value of less than one shows good growth in a company and reflects relatively lower debt than assets. These are very good results.

-A value greater than 1 shows a balance learning in the favour of debts t o current assets.

Generally one would prefer lower debts to assets when looking at good stock picks.

15
$ 0.42
$ 0.42 from @TheRandomRewarder
Sponsors of viczwa
empty
empty
empty
Avatar for viczwa
Written by
4 years ago

Comments

Warren, just hit the nail on the head. If you don't think while asleep or trying to, you are as vulnerable as a helpless child coz you'll go broke all the days of your life

$ 0.00
4 years ago

That's so true. I'm living to make everyday a money day

$ 0.00
4 years ago