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If a company has an inventory turnover ratio of 2 to 1, it means that the company’s inventory turned over twice in the reporting period.  

  • Operating margin compares a company’s operating income to net revenues. Both of these numbers can be found on a company’s income statement. To calculate operating margin, you divide a company’s income from operations (before interest and income tax expenses) by its net revenues, or 

Operating Margin = Income from Operations / Net Revenues 

Operating margin is usually expressed as a percentage. It shows, for each dollar of sales, what percentage was profit.  

  • P/E ratio compares a company’s common stock price with its earnings per share. To calculate a company’s P/E ratio, you divide a company’s stock price by its earnings per share, or 

P/E Ratio = Price per share / Earnings per share 

If a company’s stock is selling at $20 per share and the company is earning $2 per share, then the company’s P/E Ratio is 10 to 1. The company’s stock is selling at 10 times its earnings.  

  • Working capital is the money leftover if a company paid its current liabilities (that is, its debts due within one-year of the date of the balance sheet) from its current assets. 

Working Capital = Current Assets – Current Liabilities 



Saving and Investing 


Define Your Goals 

To end up where you want to be, you’ll need a roadmap, a financial plan. To get started on your plan, you’ll need to ask yourself what are the things you want to save and invest for. Here are some possibilities: 

  • A home  
  • A car  
  • An education  
  • A comfortable retirement  
  • Your children  
  • Medical or other emergencies  
  • Periods of unemployment  
  • Caring for parents  

Make your own list and then think about which goals are the most important to you. List your most important goals first. 

What do you want to save or invest for? 


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