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| Dividend Tips |
Calculating ratios like Price-to-Earnings, Price-to-Book,
Debt-to-Equity, and other financial metrics is important when looking at the
strength and stability of a potential investment. Knowing ratio math is critical for even basic
financial analysis. It’s also a
requirement for the Rule of 72.
Fundamental addition, subtraction, multiplication, and
division are table stakes for Dividend Farmers.
Failing basic math, including simple algebra, leaves an investor at the
mercy of the trading class.
Investors
who can’t double-check the financial math of their investment advisors are
disadvantaged and may be taken for an unpleasant ride. This is one reason financial math skills are
important for students. Even with Excel,
which is a powerfully helpful tool, we still need to know the underlying
principles. Teach your kids about them
early and often.
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