Intermediate7 min read
Understanding ratios
In late June 2024, Microsoft (MSFT) was trading at $441 per share. With 7,469 million , that put the company's , the total value the placed on Microsoft, at roughly $3.29 trillion.
Is $441 a fair price? On its own, the number tells you nothing. A ratio answers that question by comparing the share price, or the built from it, against a measure of the business: its , its assets, its cash flow. Margins measure how efficiently a company turns into profit. Ratios measure how the market is pricing that profit.