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Strategies & Market Trends : The Rational Analyst

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To: HeyRainier who wrote (959)	5/25/1998 9:27:00 AM
From: Scott H. Davis	Read Replies (2) of 1720

[combining related FA ratios questions] As I look at FA ratios, I am very aware that some have much greater meaning in the context of others. For example, lots of debt can result in a high return on equity, low price/sales can also be associated with low margins, high cash/share does not mean alot without factoring in the share price. I devide cash/share by share price to give a "cash per investment dollar", but all I've been able to do with the others is make a subjective call. Has anybody either developed a way to come up a formula to link ratios, or know an author you highly respect who has done so? I specifically looking at combining price/sales with profit margin, ROE with debt/equity. Any help would be greatly appreciated. Scott

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