Investing in Cyclical Stocks v/s Non Cyclical Stocks
Tutorial Added on: December 26th , 2006
Cyclical and non cyclical is the correlation of stocks with the economic conditions of the market and general fluctuations of the economy. Cyclical stocks are highly correlated with the market conditions. For example, if the economy is weak and consumers are not spending money, Cyclical stocks will experience a decline in prices. This is because with less disposable income, consumers can afford less luxuries and material goods. This results in lower sales and net income results for Cyclical stock companies. (View Full Article)

Price to Earnings (P/E) Ratio - Finance Glossary
Tutorial Added on: November 7th , 2006
If you buy a stock at a P/E ratio of 15, this means it will take you 15 years of earnings derived from that stock in order to cover up your original investment. In other words, you'll get a "payback in 15 years." Consider a corp that earned $15 million last year and had earnings per share of $15 with 1.5 million shares outstanding. If the current trading price of the stock is $150, this means the firm's P/E Ratio is = $150 / $15 = $10. This can also mean the investors are willing to pay $10 for every $1 of earnings derived from that stock

Investigating the Balance Sheet of a Company
Tutorial Added on: December 26th , 2006
One of the ways of determining if a particular stock is strong is by looking at that company's Balance Sheet. The balance sheet will illustrate what the company owns (current & long term assets), what it owes (short & long term debt) and its position of financial liquidity. You wouldn't want to invest in a company that has trouble paying its short term bills now would you? In this article, we will look at 3 of the common accounting ratios that help determine the financial position of a company. (View Full Article)

Calculation of Stock Beta - Stock Price and Market Risk (Volatility)
Tutorial Added on: November 11th , 2006
Stock Beta is a calculation or measurement of volatility or risk of a stock trading on the stock market. It is the fluctuation in stock prices and the market in general. Some stocks have greater risk than others, and thus carry higher Stock Betas. Stock betas are measured using regression analysis.

• A Beta of 1 shows the stock is moving in proportion with the market in general.
• A Beta Greater than 1 shows the stock is more volatile than the market in general (examples include many high-tech stocks).
• A Beta Less than 1 shows the stock is less volatile than the market in general (examples include many utility company stocks). (View Full Article)