Mutual Fund Ratios – Key MF Ratios and Why they are Important (2024)

FAQs

Mutual Fund Ratios – Key MF Ratios and Why they are Important? ›

Mutual Fund Ratios are analytical metrics that assess a fund's performance, risk, and cost efficiency. Key ratios include expense ratio, Sharpe ratio, and alpha, which evaluate cost structure, risk-adjusted returns, and performance relative to a benchmark, respectively, aiding in informed investment decisions.

Financial ratios offer entrepreneurs a way to evaluate their company's performance and compare it other similar businesses in their industry. Ratios measure the relationship between two or more components of financial statements. They are used most effectively when results over several periods are compared.

A mutual fund liquidity ratio is a ratio that compares the amount of cash in a mutual fund relative to its total assets. Depending on how a mutual fund ratio is calculated by a specific fund, the cash levels can include just cash or also cash equivalents.

Think of the expense ratio as the management fee paid to the fund company for the benefit of owning the fund. The expense ratio is measured as a percent of your investment in the fund. For example, a fund may charge 0.30 percent. That means you'll pay $30 per year for every $10,000 you have invested in that fund.

Return on equity ratio

This is one of the most important financial ratios for calculating profit, looking at a company's net earnings minus dividends and dividing this figure by shareholders equity. The result tells you about a company's overall profitability, and can also be referred to as return on net worth.

Debt-to-capital ratio

The higher the ratio is, the more a company is indebted. In general, debt-to-capital ratios above 40 percent warrant a closer look to make sure the company can handle the debt load. The type of financing a company uses will depend on the individual circ*mstances of that company.

These ratios can help you visualize how your company has performed over a given period of time. You can also compare your company's financial ratios with industry averages to see how you compare to other businesses in your sector. Financial ratios may also be used by investors to determine the health of a business.

They are alpha, beta, standard deviation, r-squared, and the Sharpe ratio. These statistical measures are historical predictors of investment risk/volatility, and they are all major components of modern portfolio theory (MPT).

Many MF farmers find that around 400% MF is enough to give them a good chance of finding Uniques without losing too much speed. At 500%, nearly every gear item is at least Magic quality.

What is the best expense ratio for mutual funds? ›

Investors generally look for a 'good' expense ratio when selecting MFs. Good expense ratios can vary depending on whether the fund is actively or passively managed. Typically, expense ratios between 0.5% and 0.75% are considered 'good' for actively managed funds. Ratios above 1.5% are considered high.

A "good" expense ratio will be determined by a variety of factors, such as if the fund is actively managed or passively managed. Generally, for an actively managed fund, good expense ratios range between 0.5% and 0.75%. Anything above 1.5% is considered high.

Mutual funds come in both active and indexed varieties, but most are actively managed.

There are six basic ratios that are often used to pick stocks for investment portfolios. Ratios include the working capital ratio, the quick ratio, earnings per share (EPS), price-to-earnings (P/E), debt-to-equity (D/E), and return on equity (ROE).

Key ratios are the primary financial ratios used to illustrate and summarize the current financial condition of a company. They are produced by comparing different line items from the subject's financial statements. Analysts and investors use key ratios to see how companies stack up against their peers.

Ratios are included in financial dashboards and management reports; they're used by bankers or investors when making lending or investment decisions about your business; but, most importantly, they help you understand the health and performance of your company.

Financial ratios are basic calculations using quantitative data from a company's financial statements. They are used to get insights and important information on the company's performance, profitability, and financial health.

Ratios are used in everyday life to make comparisons in-between values. The ratio of two values directly provides us with the information on how many times one value is bigger or smaller than the other. Let us take the example of cricket. Cricketer 1 scored 242 runs in 5 matches in a particular one-day match series.

Financial values are important because they guide your financial decisions and behaviors, helping you make smart investment choices and stick to a budget. They also allow you to afford the things you value by ensuring that you are financially stable.