How to use financial ratios to pick winning stocks

There are many ratios that you can consider before investing in stocks, but here are 10 of the most important ones:

Price-to-earnings ratio (P/E ratio): The P/E ratio is a measure of how much investors are willing to pay for each rupee of earnings. A high P/E ratio means that investors are paying a premium for the stock, while a low P/E ratio means that investors are paying a discount.

Price-to-book ratio (P/B ratio): The P/B ratio is a measure of how much investors are willing to pay for each rupee of book value. Book value is the value of a company's assets minus its liabilities. A high P/B ratio means that investors are paying a premium for the stock, while a low P/B ratio means that investors are paying a discount.

Earnings per share (EPS): EPS is a measure of a company's profits per share. A high EPS means that a company is profitable, while a low EPS means that a company is not profitable.

Dividend yield: The dividend yield is a measure of how much a company pays out in dividends each year as a percentage of its stock price. A high dividend yield means that a company pays out a lot of dividends, while a low dividend yield means that a company pays out very few dividends.

Debt-to-equity ratio: The debt-to-equity ratio is a measure of how much debt a company has compared to its equity. A high debt-to-equity ratio means that a company is more leveraged, while a low debt-to-equity ratio means that a company is less leveraged.

Return on equity (ROE): ROE is a measure of how much profit a company generates from its shareholders' equity. A high ROE means that a company is efficient at using its shareholders' money to generate profits.

Return on assets (ROA): ROA is a measure of how much profit a company generates from its assets. A high ROA means that a company is efficient at using its assets to generate profits.

Free cash flow (FCF): FCF is a measure of how much cash a company generates after paying its operating expenses and capital expenditures. A high FCF means that a company has a lot of cash flow available to invest in its business or return to shareholders.

Net profit margin: Net profit margin is a measure of how much profit a company generates from its sales. A high net profit margin means that a company is efficient at turning its sales into profits.

Current ratio: The current ratio is a measure of a company's ability to meet its short-term obligations. A high current ratio means that a company has plenty of liquid assets to meet its short-term obligations.

These are just a few of the ratios that you can consider before investing in stocks. It's important to use a variety of ratios to get a complete picture of a company's financial health. You should also consider other factors, such as the company's management team, its products or services, and its competitive landscape.