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Financial ratio

As explained in Investing for Programmers

Financial metrics and ratios are quantitative measures used to evaluate a company’s performance, condition, or valuation.

A financial ratio states a relationship between two independent metrics, while a financial metric reports on a company’s performance. The price-to-earnings (P/E) ratio compares share price with earnings per share (EPS). section 2.4

Use ratios as evidence within a broader company assessment:

  • Compare multiple metrics rather than fixating on one impressive number. section 2.4
  • Compare companies with industry peers to develop a stronger view of performance. section 2.4
  • Treat a severe weakness, such as inability to pay bills, as an immediate warning even when other measures look strong. section 2.4
Table 2.3 Selected ratios of NVIDIA and Walmart
Company
Market cap
Sales
Employees
P/E
Beta
NVIDIA
3457.97B
148.51B
36,000
45.65
2.12
Walmart
779.85B
685.09B
2,100,000
41.81
0.69
Data from the Finviz platform on June 8, 2025 (for the latest data, go to https://finviz.com/quote.ashx?t=NVDA&p=d or https://finviz.com/quote.ashx?t=WMT&p=d)

Compare selected metrics for NVIDIA and Walmart, including market capitalization, sales, P/E, and beta. section 2.4

How Investing for Programmers covers it

How deep it goes
Defines metrics, ratios, and P/E, then emphasizes comparison and limitations without cataloging the full financial-ratio universe.
Examples
Compares NVIDIA and Walmart using market capitalization, sales, employees, P/E, and beta.
What it assumes
Assumes basic company classification and capitalization knowledge while introducing accounting-derived metrics and ratios.
What you can do after
Evaluate companies by combining several ratios, checking industry peers, and investigating serious warning signs.
How it connects
Connects financial ratios with accounting statements, earnings per share, P/E ratio, industry peers, valuation, and value investing.
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This explainer was generated by Manning's knowledge graph from the text of Investing for Programmers. The section links point to the parts of the book it draws on.