If the current ratio is around the same level as the other companies, you are probably in good shape. In addition, look at the growth or decrease in the current ratio. A steady decrease in the current ratio over the past 3 to 5 years could spell trouble. It is calculated by dividing the company's net profit by its equity. Experienced investors sometimes look at the ROE of other companies in the same industry to make sure that the ROE of the company they are looking at is in line with its competitors'.
Value investors tend to look for bargains in the stock market.
One of the ways they determine if a stock's poor performance is temporary is to take a careful look at its historical ROEs. Ideally, EPS should increase each year. This information can give you a good idea about what the best minds on Wall Street think of certain companies. Wall Street analysts publish their best EPS estimates for big, publicly traded companies. When these companies finally report their earnings, most investors usually compare the Wall Street analysts' projections with the companies' actual EPS figures for the quarter.