Finance

How to Evaluate Stocks in the Technology Sector: Financial Ratios and Analysis

I created a table with ratios specifically for the technology industry that would require access to current financial data for companies in that industry, which I don’t have in real-time. However, I can provide a hypothetical example of how you can organize such a table and calculate ratios based on sample financial data. This is just a simplified example and does not represent actual industry/tech data.

Let’s assume we want to analyze three information technology companies: CreCoTech, TechnoCyber, and SysSoft.

Here’s a table template with sample financial data and calculated ratios for the technology industry:

CompanyPrice per ShareEarnings per ShareBook Value per ShareSales per ShareCash Flow per ShareDividend per ShareDebtEquityCurrent AssetsCurrent LiabilitiesInventory
CreCoTech$50.00$3.00$20.00$25.00$5.00$1.50$500M$1.2B$800M$400M$100M
TechnoCyber$45.00$2.50$18.00$22.00$4.50$1.00$400M$900M$700M$350M$80M
SysSoft$55.00$4.00$22.00$30.00$6.00$1.80$600M$1.5B$1.0B$500M$120M

Now, let’s calculate some key financial ratios for these companies based on the provided data:

RatioCreCoTechTechnoCyberSysSoftInf Tech Average
Price-to-Earnings (P/E) Ratio$50.00 / $3.00 = 16.67$45.00 / $2.50 = 18.00$55.00 / $4.00 = 13.7516.14
Price-to-Book (P/B) Ratio$50.00 / $20.00 = 2.50$45.00 / $18.00 = 2.50$55.00 / $22.00 = 2.502.5
Price-to-Sales (P/S) Ratio$50.00 / $25.00 = 2.00$45.00 / $22.00 = 2.05$55.00 / $30.00 = 1.831.96
Price-to-Cash Flow (P/CF) Ratio$50.00 / $5.00 = 10.00$45.00 / $4.50 = 10.00$55.00 / $6.00 = 9.179.73
Dividend Yield$1.50 / $50.00 = 3.00%$1.00 / $45.00 = 2.22%$1.80 / $55.00 = 3.27%2.83
Earnings Growth Rate (Current Earnings – Past Earnings) / Past Earnings)%10%15%12%12.1
Debt-to-Equity Ratio$500M / $1.2B = 0.42$400M / $900M = 0.44$600M / $1.5B = 0.400.42
Current Ratio$800M / $400M = 2.00$700M / $350M = 2.00$1.0B / $500M = 2.002
Quick Ratio (Acid-Test Ratio)($800M – $100M) / $400M = 1.75($700M – $80M) / $350M = 1.77($1B – $120M) / $500M = 1.761.76
Return on Equity (ROE)($3.00 / $1.2B) * 100% = 0.25%($2.50 / $0.9B) * 100% = 0.27%($4.00 / $1.5B) * 100% = 0.26%0.26%

Please note that the sectoral average column is a placeholder, and you would need to obtain real sectoral averages or benchmarks from a reliable financial data source to make meaningful comparisons. Additionally, this table provides a simplified example, and real financial analysis involves a more extensive set of ratios and a deeper understanding of the sector and individual company circumstances.