Stock Ratio Calculator

Stock is the type of investment representing the share of one’s ownership in the company. It can also be called the collection of one’s shares in the company. Investors usually buy the stocks of the company hoping that they will go up with time and will yield money in high amounts.

Stock ratios are certain dimensions that help to get a bird’s eye view of the company’s financials. If one has to invest in one out of two companies then it becomes essential for him to find out that buying the stock of which company would be more beneficial for him. Here comes the role of Stock ratios, these ratios help the investor to compare and select a more valued company.

How Do You Calculate Stock Ratio Manually?

Stock ratio includes a number of financial ratios viz. Earnings per share, Price per earnings ratio, Price per sales ratio, Price per book value ratio, and Dividend payout ratio. These collectively called stock ratio which gives an idea about the valuation and profitability of a company.

Learn about more concepts related to the Stock Ratio Calculator with the help of given modules and explanations with examples. Also, check the similar math concepts and free online calculators on arithmeticcalculator.com.

Let us understand how these stock ratios are calculated manually with an illustrated example:

1. Earnings Per Share (EPS)

Earnings per Share are a company's net profit divided by the number of common shares it has outstanding. EPS is the indicator of the profitability of the company

EPS = Net Income − Preferred Dividends/End-of-Period Common Shares Outstanding

Let us understand this calculation with an example,

Let’s suppose that company X has a net income of 18.23 Billion, a Preferred dividend of 1.61 Billion, and weighted common shares of 10.2 Billion.

Then the EPS of that company can be calculated as,

(18.23-1.61)/10.2 = 1.63

Hence we can say that the Earnings per Share of Company X is 1.63 Billion.

2. Price/ Earnings Ratio

Price/ Earnings measures the current price share of a company relative to its earnings per share. It is calculated as

P/E ratio = Share Price / Earnings per Share

Let’s understand this stock Price/Earnings ratio with an example,

Suppose the same company X has a current share price of 330 and the Earning per Share for the previous fiscal year was 3.

Then Price per Earning for Company X would be 330/ 3 = 110.

3. Price/ Sales Ratio

Price/ Sales Ratio is calculated by dividing the company's total market capitalization by the company's total sales or revenue over the past 12 months.

P/S Ratio = Market Value per Share / Sales Per Share (12 months)

Want to grasp more about the calculation part? Look at this example illustrated below.

Suppose Company X's fiscal revenue for one year is of 274.5 billion. With 16.53 billion shares outstanding for the next year. Also, the sales per share for company X is 16.60 having a stock price of 145. With all this data the Price per sales ratio of Company X can be calculated as

Market value per share or share price (145) / sales per share (16.60)

So the company X  P/S ratio = 145/16.60= 8.73

4. Price/ Book Value Ratio

Price/ Book Value Ratio is used to compare a company's current market value to its book value where book value is the total value of all assets subtracting the value of liabilities.

P/BV Ratio= Market Price per Share/ Book value per share.

This ratio calculation will be more clear with this example

Suppose company X has

Assets = 100 million, Liabilities = 75 million, Stock price = 5 per share and Outstanding shares = 10 million

The book value of the company will be: Assets – Liabilities = 100-75 = 25 million

Book value per share will be: Book value/ outstanding shares = 25/10 = 2.5 million

5. Price per Book Value Ratio

Price per Book Value Ratio can be calculated as Market Price per share (5)/ Book Value per Share (2.5)

So we can say that the P/BV ratio of company X is 2

6. Dividend Payout Ratio

The Dividend Payout Ratio is defined as the total amount of dividends paid yearly divided by shareholders relative to the company’s net income or EPS.

Dividend Payout Ratio = Dividends paid/ Net Income

Also, you can calculate the Dividend Payout Ratio by using the formula given below:

Dividend Payout Ratio = Dividend per share/ EPS (Earnings per share)

Dividend Payout ratio calculation can be better understood with the example below

Let’s Suppose Company X has paid 0.87 per share in dividends in 12 months with an EPS of 5.67.

So its Dividend Payout ratio can be calculated as 0.87/5.67 = 0.15 or 15 percent.

FAQs on Online Stock Ratio Calculator With Steps:

1. What exactly is Stock Ratio?

The stock ratio is the number that is obtained by dividing a company's current share price by its earnings per share.

2. What will be the P/E Ratio for a company with the current share price of 25 and its earnings per share is 1.35? 

The P/E ratio for that company would be 25/1.35 = 18.5

3. What does the higher P/E ratio show?

It shows that the investors are willing to pay a high price for the company’s share.

4. How does the P/B ratio help the investors?

The P/B ratio helps the investors to identify overvalued companies.