VEDKUBER / ACADEMY / FUNDAMENTAL ANALYSIS

The 5 Numbers That Tell 80% of the Story

हिंदी में पढ़ें

Why Just 5 Numbers?

You don't need 40 ratios to get a reasonable read on a company. Five numbers, checked together, cover most of what matters for a retail investor's first-pass filter. The word "together" is doing real work here: each of the five can be made to look good on its own, and a company that looks good on all five at once is genuinely rare.

NumberPlain questionWhere it comes from
P/EHow much am I paying per ₹1 of profit?Price ÷ earnings per share
ROEHow well do they use owners' money?Net profit ÷ equity
D/EHow much is borrowed?Total debt ÷ equity
MarginsHow much of each sale is kept?Profit ÷ revenue
GrowthIs the business getting bigger?Revenue and profit, YoY

1. P/E Ratio (Price-to-Earnings)

Price ÷ earnings per share. Tells you how much you're paying for ₹1 of current profit.

Check your understanding

  1. ROE measures:
  2. Why is comparing D/E ratio across different sectors (e.g., a bank vs. a manufacturer) misleading?
  3. A stock with a very low P/E, rising debt, falling margins, and no growth is best described as:
  4. A company reports ROE of 28% — well above its sector — alongside a Debt-to-Equity ratio of 3.5. Which reading is most defensible?
  5. Over the last year a company's net profit rose 18% while its revenue fell 2%. What is the most likely explanation, and what does it imply?

Answers and scoring are in the app — free practice link below.

Practice free with ₹25,000 virtual money

Open VedKuber to read the full chapter, take the quiz, and practise on real market prices with zero risk. The full chapter is free to read inside the app.

Start free →