Hi Kellie,
Let’s get to the basic question first. I think some of the terms only make sense to you when understand the company financials.
so let me explain the basic first, and Peter can get to the more advance terms:
(d) Price / Book
Price is the market value – that means what investors actually pay in the market trading. This is fluctuating at all time
Book Value is the “net worth” of the company, also same as “equity”. You can find this at the Balance Sheet of the annual report.
(f) Retention rate
Every year, the company makes profit. They will give out certain portion as dividend (if there is any), and some profits are retained in the company, for further growth.
The retention ratio refers to the percentage of net income that is retained to grow the business, rather than being paid out as dividends. It is the opposite of the payout ratio, which measures the percentage of earnings paid out to shareholders as dividends.
The retention ratio is 100% for companies that do not pay dividends, and is zero for companies that pay out their entire net income as dividends.
(h) P/E = price per earning
This is to check how expensive a stock price is. Let’s say the company makes RM10 million net profit a year. And the price traded now (referred as Market Cap) is RM200m.
You divide 200/10 = 20.
The lower the number of PE, it means the company is selling at a cheaper price. There will be no PE if the company is making a loss.
(i) Earning growth rate
This is how fast the company profit is growing. For example, if a company make profit RM1m in 2013, then make RM1.5m in 2014. It means the earning growth rate is 50%.
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