Articles

Company valuation is the process of determining the appropriate price - or "fair value" - of a company's stock, as opposed to the "market price" at which it is currently trading on the stock exchange. For a DGI investor, valuation serves as an investment safety net. As Warren Buffett says: "Price is what you pay; value is what you get." We look for excellent companies trading below their true value in order to create a "margin of safety" (a highly recommended book). Reading F

Financial ratios are mathematical metrics derived by combining data from the three financial statements previously reviewed (balance sheet, income statement, and cash flow statement). These ratios enable "apples-to-apples" comparisons - such as evaluating a large company against a small one or comparing a company to its industry average. Without financial ratios, a figure like "a profit of one billion dollars" is meaningless unless one knows the amount of capital invested to