STOCK FUNDAMENTAL INDICATORS

a. FUNDAMENTAL DATA

1. Income Statement

How is the growth of net income?

Net Profit Margin (NPM) formula = Net Profit/Revenue

2. Balance Sheet

EQUITY > LIABILITY (except for banking stocks)

Debt Equity Ratio (DER) formula = Liability/Equity (the lower the better, <100%.

Except for banking stocks)

3. Cash Flow

How much is the cash reserve the limited liability company has?

Why cash reserve is important?

Cash reserve is important, in the event of sudden crisis and the limited liability

company has to pay its debts.

4. Shareholders Composition

Public <50%

5. Earnings Per Share

Earning Per Share (EPS) formula = Net Income/Number of Shares (the higher the

better)
 6. Dividend Per Share

Dividend Per Share (DPS) formula = total dividends paid out over a period/shares

outstanding

How to avoid dividend trap?

7. Dividend Payout Ratio

Dividend Payout Ratio (DPR) formula = the percentage of net income used for dividend

(e.g., = on the 2020 net income is 50.000.000,00 IDR and the DPR is 50%, so the half

of net income used for dividend)

The normal amount of DPR percentage is approximately around 50%, but if the

limited liability company has plenty of cash reserve, DPR percentage above 50%

is not a problem. Growth limited liability company commonly gives around 20%-

50% DPR percentage.

b. VALUATION

1. Price Earnings Ratio

Price Earnings Ratio (PER) formula = Stock Price/Earnings Per Share (must be

compared with similar limited liability company, the lower the better)

2. Book Value Per Share

Book Value Per Share (BVPS) formula = Total Equity/Shares Outstanding (the lower

the better)

3. Price Book Value Ratio

Price Book Value Ratio (PBVR) formula = Stock Price/Book Value Per Share (the lower

the better)

If PBVR = 1x, the share price in accordance with the equity held.

In the event when the limited liability company’s PBVR far from 1x, the limited

liability company has a definitely high Return On Equity (ROE).

(e.g., = if PBVR 2.5x, means the shares sold around 150% more expensive)

4. Return On Equity

Return On Equity (ROE) formula = Net Income After Tax/Equity (the higher the better,

>10%)

Return On Equity (ROE) can be compared with similar limited liability company.

5. Cash Ratio

Cash Ratio formula = (Cash + Marketable Securities)/Current Liabilities (the higher the

better)

6. Quick Ratio

Quick Ratio formula = (Cash + Marketable Securities + Receivables)/Current Liabilities

7. Current Ratio

Current Ratio formula = (Cash + Marketable Securities + Receivables +

Inventory)/Current Liabilities