Definition of Price/growth flow’
Rising prices flow is a financial indicator that defines a company, producing solid earnings and investing heavily in research and development (R & d). It is measured using the following formula:
The penetration of the Price/growth flow’
Price / growth flow is an expression of power, profits and growth potential from the current price per share. Analysts are looking at the metrics for the window in the distribution of the capital of the company. For example, the user may spend more on developing new products and services than the current MVP. The idea is that low income may be offset by more spending on R & d, and Vice versa. If the company decides to spend today and ignore the future, the current earnings per share may exceed the R & d expenditure. Both cases result in high value of the coefficient, which means a handsome profit per share or R & d spending. That way investors will be able to assess the potential of profit growth now and in the future.
But the growth of consumption does not speak about how effectively management allocates capital. Large R & d bill, for example, does not guarantee the launch of a new product or the implementation of the market will generate a profit in subsequent quarters. Meanwhile, the steady growth of income does not give investors an idea about the prospects and growth opportunities. The optimal ratio is the one that sets the balance between earnings and R&D without completely tilting to one metric. In the case that cost-increasing flow of low entry value, this tells investors that the price has deviated far beyond the basics. In short, market activity is due to something other than current revenue growth or potential innovation. It can be political, economic, or something completely unrelated driving day-to-day movements. In this case, investors would be wise to monitor the news, economic data and other financial indicators, as the sales price and the price of the book.
Other types of financial ratios
Price / growth flow is a popular method of measuring current and future government earnings, but in some cases, other financial indicators provide greater clarity in company fundamentals or stock prices. They include price-sales, which compare full-year profit in market capitalization and value to book value, a measure of stock market value to book value. Both metrics compare specific items on the balance sheet or the statement of profit and loss the value of the stock market. Investors toys with various financial ratios in assessing the growth prospects of sectors or individual stocks. For example, the price-book is considered as an accurate tool for assessing the financial sector, since stock prices of banks and financial institutions rarely deviates from their carrying value.