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 company’s 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.
This author proposes a set of personal financial ratios that individuals can use to analyze their financial standing.
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