Stock Selection Technique

• Consolidated Profit After Tax- compare stock price with earnings.
• NTA- financial foundation of a company. Ideally, reccommended stock is priced 33% below NTA.
• ROE- company's ability to utilise its assets to generate profits.
• Leverage ratio=long term liabilities/total shareholder's fund. It measures the degree of indebtness of company. Increasing leverage ratio, increasing company borrowings. However, company may depend on loans to large extent to finance new investments & growth. L.R increase, sales and profits increase, means a form of growth. L.R increase, sales & profits decrease, financial trouble.