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Analysis of Stock Exchange Ratios
To complete the fundamental analysis of a company, besides the analysis from the sector in which the company operates and of the study of the annual accounts, you must valuate the so called stock exchange ratios.
The value of shares
The calculation of the value of a share is very useful to estimate the price to pay for or the price that you could obtain by selling it. For it, it is convenient to calculate its value and to compare it with the present quotation of the share in the market; that is, its current price
Logically, as the common sense indicates, you have to purchase shares when they are cheap and sell them when they are expensive. However, the history of the stock exchange market shows day to day that the common sense is not the most common of the senses.
The problem is that the value of a share can be calculated in several ways and also, not all the investors have access to all the available information of a company. On the other hand, some valuation methods for shares demand making previsions about the future of the company, which calls for a higher grade of subjectivity.
The main valuation methods differ according to the type of information used, that might be the last balance sheet or of its account if it results. This last may be historical and because of it, referring to the past, or provisional which refers to the next coming years of the company.