Description: There are lots of ways to measure profitability. Many investors fixate on a companyâ€™s earnings growth, especially for one-year or five-year periods. I have nothing against that measure — well, wait a moment, I do. It is too sensitive to the starting point, making companies look unduly strong when they are coming off a bad year, or unfairly weak when the base year is an especially prosperous one.
Keys: Financial analysis, metrics, investing, stock market
Questions for discussion:
- What do you think of these metrics as a means for evaluating stock values? Explain your answer.
- Which one do you believe is the best indicator of corporate success? Explain your thinking.