| --- | --- | --- | --- | | Price Earnings Ratio (PER) | Ratio of stock price to earnings per share (EPS) | Fair value of stock price | To judge whether the stock price is high or low relative to earnings. | Generally, lower PER indicates undervaluation. Appropriate values vary by industry, but 10-20 is a general range. | | Price Book-value Ratio (PBR) | Ratio of stock price to book value per share (BPS) | Fair value of stock price | To judge whether the stock price is high or low relative to the company’s net assets. | PBR less than 1 is undervalued. Even if it is 1 or more, companies with high growth potential are acceptable even if high. | | Return On Equity (ROE) | Ratio of net income to equity | Efficiency and profitability of shareholders’ equity | To evaluate the profitability relative to the company’s shareholders’ equity. | Generally, higher ROE indicates higher efficiency. 15% or more is desirable. | | Return On Assets (ROA) | Ratio of net income to total assets | Efficiency and profitability of total assets | To evaluate the profitability relative to the company’s total assets. | Generally, higher ROA indicates higher efficiency. 5% or more is desirable. | | Profit Margin | Ratio of profit to sales | Profitability of the company | To evaluate the company’s profitability from multiple angles. | Depends on industry and company scale, but higher indicates higher profitability. | | Current Ratio | Ratio of how much current assets can cover current liabilities | Short-term solvency | To evaluate the company’s short-term solvency. | Generally, 100% or more is desirable. 200% or more is healthy. | | Fixed Ratio | Ratio of how much fixed assets are covered by equity | Long-term financial health | To evaluate the company’s long-term financial health. | Generally, 100% or less is desirable. | | Debt Ratio | Ratio of debt to equity | Financial risk | To evaluate the company’s financial risk. | Generally, 100% or less is desirable. | | Earnings Per Share (EPS) | Net income per share | Profitability for shareholders | To evaluate profitability for shareholders. | Higher indicates higher profitability. Growth compared to past EPS is also important. | | Book-value Per Share (BPS) | Net assets per share | Fair value of stock price | To evaluate whether the stock price is appropriate relative to the company’s net assets. | Higher indicates higher asset value. Evaluated in conjunction with PBR. | | Dividend Yield | Ratio of dividend to stock price | Return on investment | To evaluate the return on shareholders’ investment. | Generally, 2-4% is an appropriate range. Higher indicates larger return. |
Indicators Used in Qualitative Evaluation
| Indicator Name | Overview | What is Evaluated | When Used | Evaluation Method |
|---|---|---|---|---|
| Management Quality | Evaluate experience, ability, and reliability of management | Management quality and company future | To judge the quality of management. | Evaluation of management’s past achievements, leadership, corporate culture, etc. |
| Market Environment | Evaluate industry growth, competition, regulatory environment, etc. | Industry attractiveness and company competitiveness | To judge industry attractiveness and competitiveness. | Analysis of industry growth rate, competition situation, regulatory environment. |
| Brand Value | Evaluate company’s brand power and market recognition | Brand power and competitive advantage | To judge the company’s competitive advantage. | Evaluation of brand recognition, reliability, customer satisfaction. |
| Innovation Capability | Evaluate company’s technological innovation ability and R&D activities | Technological innovation power and future growth potential | To judge technological innovation power. | Evaluation of R&D expenses, number of patents, track record of new product introduction, etc. |
| Sustainability | Evaluate company’s ESG (Environmental, Social, Governance) initiatives | ESG initiatives and company sustainability | To judge company sustainability. | Evaluation of environmental measures, social contribution activities, quality of governance. |
| Customer Satisfaction | Evaluate customer satisfaction and repeat rate | Customer satisfaction and customer loyalty | To judge company’s customer satisfaction. | Evaluation of customer surveys, repeat rates, word of mouth. |
| Employee Satisfaction | Evaluate employee satisfaction and retention rate | Employee satisfaction and company internal environment | To judge company’s internal environment. | Evaluation of employee surveys, turnover rates, welfare benefits. |
| Corporate Culture | Evaluate company culture and values | Corporate culture and employee motivation | To understand company culture and judge employee motivation. | Evaluation of company vision, mission, and values. |
| Relationship with Stakeholders | Evaluate relationships with business partners, investors, local communities, etc. | Trust relationship with stakeholders | To judge relationships with stakeholders. | Evaluation by business partners and investors, evaluation of contribution to local communities. |
