Book value per share is the measure of how much net asset are backing each share. Book value is known as the net worth of a company. The Book value is calculated by subtracting company’s entire liability from its asset base. Many analysts use it to get a fair idea about the valuation of stock. Always choose stocks of higher book value, it gives a surety of return. 

However, book value doesn't have much relevance for companies with lower the asset base i.e media, knowledge, service industries.

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10) Profitability

Profitability is a measure of the performance or operational efficiency of a company. A higher profit margin is definitely better and it adds to shareholders' net worth. Profitability can be valued under EBITDA margin or net profit margin. EBITDA is the Earnings before Interest tax depreciation and Amortization. Net profit is the amount a company is left with after paying away to the Government and its creditors. The net profit is then distributed among the shareholders.

EBITDA margin and net profit margin can be calculated by diving EBITDA or net profit by the revenue.

Remember, that long term investment in stock markets would provide you good returns. However don’t forget that every successful investment strategy depends on identifying the good quality stocks. Hence, use these ratios to research stocks before investing in them.

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