The 3 major pieces of a company’s annual report are the income statement, the balance sheet and the cash flow statement.

Revenue

The revenue is the most “raw” source of a company’s income. It is also called turnover.

\[Revenue = \text{quantities of sold goods}*\text{prices of sold goods}\]

Earnings

Earnings are the net benefits (= profits) of a company. Depending on the context, it sometimes refers to the EBIT or EBITDA.

Ratios

\[EPS = \frac{\text{net income}}{\text{# oustanding shares}}\] \[P/E = \frac{\text{share price}}{\text{EPS}}\] \[P/B = \frac{\text{market capitalization}}{\text{book value}} = \frac{\text{market capitalization}}{\text{assets} - \text{liabilities}}\]

P/E and P/B are multiplicative factors.

Sources

investing.com: current financial ratios per company and statistics per industry. Available for free:

• P/E ratios per industry and per country (write a company name -> profile -> click on the industry -> ratios for all companies)

• Distribution shapes

zonebourse.com: historical P/E and P/B.

fullratio.com: P/E ratios per industries.

Examples of P/E

Aerospace & defense (FR): 28

Thales: 35

Safran: 25

Automobile (US):

Tesla: 37 (top 10%)

Ford: 12

Note: the very high Tesla’s P/E ratio highlights a potential overvaluation of the company.

Financials (CH): 17

JB: 24

UBS: 3