Analyzing Your Financial Health Using Personal Financial Ratios
by Charles J. Farrell
Investors commonly use stock ratios such as price to earnings, price to book, and dividend yield to assess the financial health of a company. The reasons the ratios are so widely used are because they convey a great deal of information in a concise format and allow investors to benchmark a companys financial status.
When it comes to assessing the financial health of individuals, however, there are no comparable ratios that would allow investors to conduct a similar analysis of their personal financial circumstances.
In this article
- A Road Map to Retirement
- Calculating the Ratios
- Using the Ratios
- A Hypothetical Example
- The Assumptions
- Why Not Include Your Home?
- Keeping on Track
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This article establishes a set of personal financial ratios that individuals can use to analyze their financial standing.
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