Steve Johnson from Forager Funds Management explains why he is cautious of focusing on one financial ratio when evaluating companies

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Steve Johnson from Forager Funds Management explains why he is cautious of focusing on one financial ratio when evaluating companies. This is perhaps the most dangerous question in investing. The importance of a ratio is completely dependent on the type of business you are analysing. First start with understanding the business, then work out which ratios are relevant. Price to book is very important when analysing a bank, and completely irrelevant when analysing REA Group.


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