7) Average Daily Trading Volume

Each retail investor usually holds a smaller number of shares, but collectively they hold a major stake in the company. Average daily trading volume in the stock exchanges is one of the parameter which shows direct sign from the investor, about the company’s future prospects.

If the average trading volume show an increase either quarter by quarter or year on year, it means investors’ confidence is increasing and they are buying more and more.

But when the average trading volume declines, it shows that the investor’s confidence is decreasing and they are coming out of the stocks.

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8) Debt Equity Ratio

Debt equity ratio shows the proportion of debt in relation with equity. A lower ratio is better and more preferable because if the debt portion is high, a major part of the profit will be used to pay off debt and loan interest and which would leave very little profit to be distributed among the shareholders. Debt Equity Ratio is computed by dividing a company’s debt by its net worth.

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