The Trading Marvel®

Don’t forget….”Avantel

9th day of learning:- 📚 Stock Market Learning Series – PEG Ratio PEG Ratio (Price/Earnings to Growth) helps you know whether a stock’s valuation is justified by its future growth. Formula: PEG = P/E Ratio ÷ EPS Growth Rate (%) ✅ PEG < 1 → Potentially Undervalued ✅ PEG = 1–1.5 → Fairly Valued 👍 ⚠️ PEG > 2 → May be Overvalued Example: P/E = 20 | EPS Growth = 25% PEG = 0.8 ✅ Golden Rule: Never buy a stock based only on P/E. Always check PEG + ROE + ROCE + D/E + Sales & Profit Growth before investing.

8th Day of Learning:- Current Ratio The Current Ratio measures a company’s ability to pay its short-term liabilities using its short-term assets. Definition:- Current Ratio = Current Assets ÷ Current Liabilities Easy example:- * Current Assets = ₹200 crore * Current Liabilities = ₹100 crore Current Ratio = 200 ÷ 100 = 2.0 This means the company has ₹2 of current assets to pay every ₹1 of short-term liabilities. Why is the Current Ratio important? * Shows the company’s short-term financial strength. * Indicates whether it can pay bills, suppliers, and other obligations due within one year. * A healthy current ratio reduces the risk of liquidity problems. What is a good Current Ratio? * 1.5 – 2.5 → Excellent ⭐⭐⭐⭐⭐ * 1.2 – 1.5 → Good ⭐⭐⭐⭐ * 1.0 – 1.2 → Acceptable ⭐⭐⭐ * Below 1.0 → Warning sign ⚠️ (the company may struggle to meet short-term obligations) Important point:- A very high Current Ratio (above 3) isn’t always a good sign. It can indicate the company is holding too much idle cash or inventory instead of using its assets efficiently. Rule for long-term investing Look for companies with: * ✅ Current Ratio above 1.5 * ✅ Low Debt-to-Equity (D/E) Ratio * ✅ Strong ROE and ROCE * ✅ Consistent sales and profit growth Simple way to remember:- * Current Ratio > 1 = Company can generally pay its short-term debts. * Current Ratio < 1 = Company may face short-term liquidity issues. * Current Ratio around 2 = Often considered a healthy balance.